AAR reports rise in new-business activity

New-business activity - regarded as a significant indicator of the ad industry's health - increased last year. But only by a modest 7 per cent.

A total of 767 accounts switched agencies in 2002 compared with 716 the previous year, according to new research from the AAR.

Martin Jones, the AAR's director of advertising, cited the prospect of a Middle East war as a major reason why the level of pitch activity was not showing any dramatic improvement. "Clients are not able to see their way forward," he said.

The AAR claims the economic climate means many advertisers will now review only as a last resort. "The vast majority of clients will only call a pitch if they're launching something new, or have got to the end of their tether with their agencies," Jones added.

Thirty-seven per cent of account moves last year were made without a formal competitive pitch, according to the research.

It also suggests that the odds remain heavily stacked against incumbent agencies retaining business put up for review. Just 34 per cent of incumbent shops successfully repitched for accounts last year.

Jones said the best hope for incumbents was to have several agencies pitching against them. Seeing so many presentations often caused clients to become confused, increasing the likelihood of accounts staying put.

The retail and travel sectors accounted for 20 per cent of all reviews last year.

"New-business activity is happening but agencies don't necessarily perceive it to be the case," he concluded.