AAR: pitch budgets slide

Advertising agencies slashed investment in new business last year, survey claims.

Advertising agencies slashed their investment in new business and marketing last year, according to a survey by the AAR.

Only 16.6 per cent of the top 20 advertising agencies had a budget (not including staff) of more than £500,000 for new business in 2008. This compares with 40 per cent in 2006, the last time the AAR's agency new-business resource survey was conducted.

The survey also found that media agencies participated in almost twice as many pitches in 2008 as they did in 2006 when the report was last undertaken, while the number of pitches advertising agencies participated in remained broadly unchanged.

Media agencies took part in an average of 34.5 pitches, compared with 18 in 2006, a rise of 91.6 per cent. These included some high-profile UK contests such as Santander, Orange and Cadbury.

Media agencies employed the highest number of staff in new business and marketing, with an average of three full-time staff, while advertising agencies employed an average of 2.1 employees, which increased to 3.2 among the top 20 agencies.

Media agencies invested the greatest amount in new business, with 75 per cent investing more than £100,000, followed by advertising agencies, with 72 per cent spending a similar amount.

New-business directors in media agencies were most likely to be on the agency's board, with 75 per cent represented, while 43.3 per cent of new-business directors in advertising agencies reached board level. This figure dropped to 41 per cent in the top 20 advertising agencies.

The survey also found that creative pitches were the most common in 2008, with intermediaries and outside consultants most often used in advertising agency pitches at 35 per cent, while digital agencies had the least outside assistance at 13.4 per cent.

Paul Phillips, the managing director of the AAR, said: "On one hand, agencies of all sizes are under financial pressure and therefore looking to make savings wherever possible, so this might simply reflect a cutback across the board rather than simply in the area of new business.

"Equally, it is possible that agencies are getting better at being more selective in the new-business opportunities they go for, rather than throwing money and cardboard at every opportunity in the hope that some of it will stick."