Close-Up: Live Issue - How often should agencies pitch?

Agencies have to court new clients in order to thrive, but is pitching the only way, Kunal Dutta asks.

The New-Business Survey, released by the AAR last week, threw up some interesting findings beyond the usual shortlists, shoot-outs and winners. They included Clemmow Hornby Inge clocking up the most pieces of new business in 2006 (11), as well as having the best conversion rates during the year (83.3 per cent).

Winning new business is a necessity for the long-term health of any ad agency. But pitching for it is a far less straightforward process. Why? For most agencies, it is an extracurricular activity; a dangling carrot that expends energies, man-hours and resources, without the guarantee of success or income at the end. One intermediary estimates that the conservative cost for a pitch sits between £40,000 and £50,000. This can rise to £200,000 in some cases.

"Pitches are the lifeblood of an agency," Stuart Pocock, the managing director of the pitch consultancy The Observatory, says. "They can also unlock the competitive streak that is critical at the heart of any agency's DNA."

It's not hard to see why. Away from the daily routine of account servicing, pitches harness collective thinking and offer agencies the chance to pit their wits against rivals on new brands outside of their own portfolio. The journey itself may be fraught with unknowns, but it also has a motivational value that will grow should an agency win.

The challenge is deciding when pitching is (and isn't) appropriate. "Some agencies end up madly chasing every bit of new business and fail to notice the effect it has on their existing client base," Pocock says.

So how many pitches should agencies aspire to do? Martin Jones, the director of advertising at the AAR, cites ten a year as a benchmark: "Take August and December out, most agencies should be aiming for one pitch a month to keep their hand in." But surely this is relative to the size of an agency? "Not necessarily," Jones says. "Entering a pitch means you're reliant on the same group of senior management."

But Sarah Gold, the joint managing director of CHI, disagrees with this. She says: "The decision to pitch has to be carefully reached by the collective agency."

This is a view vindicated by Ben Fennell, the managing director of Bartle Bogle Hegarty, who took the decision last year to stop chasing new business to focus agency resources on embedding business won from the year before.

So what about VCCP, M&C Saatchi and Beattie McGuinness Bungay, which seem often to bypass pitching?Andrew Melsom, Agency Insight's managing director, believes this is down to the expertise of their new-business departments. "They are great exponents of new-business prospecting. They sustain relationships over a long period."

With agencies such as Wieden & Kennedy and Krow demonstrating strong rates of conversion in 2006, they show the benefits of carefully selected pitching. "These agencies are good at turning opportunities down if they don't think they can do it justice," Jones says.

And the challenge is harder than ever. According to a creative director at one London agency: "Gone are the days where you could rock up with a couple of scams and a few strategic approaches to talk about. Now, the strategy needs to be bang-on brief, ideas worked through and all the creative work finished."

With more agencies fishing for business from the same pool, the strategies adopted to get to the pitch stage will be as critical as the ability to convert them into real income.

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AGENCY CHIEF - Ben Fennell, managing director, Bartle Bogle Hegarty

"Pitches are good for a business. There isn't a more effective way of winning new business.

"The number of times an agency pitches is relative to the size of the business. If you're a small business, when the agency's pitching, everyone feels it. Conversely, agencies such as BBH can compartmentalise pitch teams, so that existing clients stay serviced.

"Despite their addictive nature, in 2006 we took the decision to close the doors on new business and concentrate on building and extending the relationships with our exisiting clients. This year, we're back in the hunt, and if we're pitching every couple of months, that will feel like the right kind of tempo."

INTERMEDIARY - Andrew Melsom, managing director, Agency Insight

"It's dependent on how many invitations to pitch an agency gets. But I've found that it does work for agencies to decline business, rather than frantically chase everything.

"When talented people come together, it's always very attractive to marketers. Start-up agencies in their early days tend to win around 80 per cent of pitches. As an agency matures, that figure falls to around 20 to 25 per cent.

"Agencies are judged on whether or not they have the basic suite of services. Much is made of agency politics to get to the pitch stage, but that evaporates as the pitch develops.

"Now, there are so many people involved in decisions, one person's politics can't survive anymore."

INTERMEDIARY - Stuart Pocock, managing director, The Observatory

"The number of pitches depends on the resources available, and the nature of the business the agency is going after.

"The whole process can also be time-consuming for both parties. On average, there is normally a three-month cycle from putting down a request for information to actually pitching.

"The average win is around one in four. But then you get agencies that can get on to a winning streak and chase more, rather than working on retaining their own business, which suffers as a result.

"There is a myth that clients love pitching. They don't. Pitches take up time, expense and shift focus off the day-to-day job."

AGENCY CHIEF - Bill Muirhead, joint founder, M&C Saatchi

"Two-thirds of our new business is pitched for, the other third often comes without a pitch. A lot of our competitors hate us for what they think is 'cronyism'. But if we see an opportunity with a client, we'll cold-call them. There's no insider secret. You can often assess the health of a client and agency relationship by looking at the ads.

"We've built up some strong relationships with the people we've worked with and earned their trust over the years. A lot of the business we've won without a pitch comes from those relationships.

"New business is an agency's lifeblood. We're always up for going into pitch. But if we win business without a pitch, then great."