Will pitch frenzy never end? The media agency pool, which, not long ago, was a relatively tranquil stretch of placid water, now seethes and boils with piranha-like intensity.
This year, we've seen a steady stream of major global and regional accounts being put up for grabs. In the UK alone, taking local business currently up for pitch and adding in the national components of these international reviews, there's at least 10 per cent of the market in play - and three of the UK's top five advertisers (COI, Unilever and Reckitt Benckiser) are in review mode.
Exciting times. We'd even go so far as to call them heady - but that might be a bit close to the bone. The light-headedness you're feeling may not be an unreservedly healthy sign.
These mammoth pitches are a huge drain on media agency resources; and they are, many argue, sapping the strength from a business that, thanks to the downturn and cuts in advertiser budgets, was already running on empty.
And for what? If the rumours are true, the new terms being sought by clients on some of these accounts make them decidedly unattractive in the first place. We're talking not just about microscopically small remuneration rates on reduced levels of business, but also changes in payment terms and conditions that will force agencies to absorb even more up-front risk.
And, from a morale point of view, it's not as if there's much of a sense of everyone being in this together. Take Unilever. Its second-quarter results revealed that, while profits performance remains weak, turnover and sales (up 4 per cent) are climbing - and prospects aren't half bad for next year. Its results document pointed specifically to the role of marketing spend in developing renewed momentum. Or Kraft. In the first half of 2009, total net revenue was up 8 per cent. For many multinationals, if the recession isn't exactly over, there's at least light at the end of the tunnel.
For many media owners, too, the forecasts are looking just a little rosier than they were. Meanwhile, media agencies, in contrast, seem to be tying themselves into a depression for the foreseeable future.The poor dears, we hear some cynics respond. No-one forces agencies to pitch; and no-one, pardon our French, forces them to drop their drawers when they do.
Back in the summer, there was a "bring it on" attitude in some senior management circles. Bosses at the bigger media agencies appeared to believe that the downturn, combined with more fundamental structural changes related to the digital and mobile media revolutions, was presenting a once-in-a-generation land-grab opportunity.
Devil take the hindmost, in other words, and damn the cost. And the spirit of Nietzsche - "that which does not kill us makes us stronger" - seemed to loom large. Take, for example, the views of Colin Gottlieb, the chief executive EMEA of Omnicom Media Group, when he was asked recently by Campaign to reflect on the downturn's impact.
He said: "Painful as it is, this recession is highly disruptive and a powerful force for change. It demands the development of new ideas and facilitates long-needed action. This assumes the vast majority of people are prepared to learn from previous mistakes - which they're not. That's why the lucky few will emerge stronger and better from the recession."
Interestingly, in hindsight, Gottlieb admitted that the definition of "lucky" in this context could prove contentious. Because, in recent weeks, the mood has darkened considerably. Recent pitch activity has seen clients making what are described as outrageous demands on media agencies that were already offering blood.
One agency boss told Campaign last week that the conduct of a recent pitch was unprecedented in his 30 years' experience of the business. He maintained (off the record, understandably) that the behaviour of the media auditing company overseeing the pitch was "utterly shocking" and the attitude of the client was stupefyingly ignorant. He added that there now seems to be a clique of heavyweight global clients who are egging each other on to squeeze media agencies until their pips squeak.
We've seen pitches recently where, allegedly, the client has issued a definitive brief asking for a certain level of cost savings. And then, when the agencies concerned have busted a gut to show they can meet it, the client has come back and asked for even more. We've reached the stage where agencies are effectively being asked to pay for the privilege of working on big blue-chip accounts. And when that happens, it's surely time to admit we're in a place that's more Gotterdammerung than Gottlieb.
As one source puts it: "We've arrived at a Darwinian moment. There will be agencies who can't say no. There will be others who come to their senses and realise there's a line beyond which they cannot go. I reckon, as we come out of recession, there will be forward-looking clients with Champions League (status) agencies. And there will be ignorant clients with second-rate agencies. Or agencies they have made second rate."
It apparently sets at nought all the hard work media agencies have been doing in recent years to convince advertisers that they should be seen as grown-up professional advisors - strategic consultants with a genuine business development role. In a few short months, they've seemingly been relegated to gimcrack commodity suppliers.
As our "Darwinian" theorist puts it: "The model is bust. Some clients know it's bust but they're ploughing on regardless. There are some outrageous things happening out there, unfortunately. The industry could face its own internal version of the credit crunch in 2010 - and there are those who sort of hope it happens. If it takes a couple of train crashes, then so be it."
ADVERTISER VIEW - Bob Wootton director of media and advertising, ISBA
Advertisers want best value in the current climate and many believe the only way to get a true handle on value is to put the business up for grabs. But is it possible for everybody to pursue best (or better) value in this manner at the same time? And, while the agency business works on the basis of a high annual churn, is it possible simultaneously to service so many requests to pitch or repitch?
The answer to the former is, in principle, yes, if an advertiser considers business value an absolute thing. It gets difficult when the value sought is relative, because it is not possible for everybody to be buying services at below average or benchmark price.
The answer to the latter is no. It is simply not possible effectively to service existing business while going the extra mile that pitches invariably demand.
Increasingly stretched agencies, then, will continue to make cut-throat offers to attract business, while some advertisers could be disappointed by the quality of some pitches they see.
- "Agencies will continue to make cut-throat offers, while advertisers could be disappointed by the quality of some pitches they see."
AGENCY VIEW - Nick Brien global president and chief executive, Mediabrands (which incorporates the media networks Initiative and Universal McCann)
The old marketing models are broken. The digital revolution, as embodied especially in the growth of social media, has fundamentally changed the ways consumers engage with brands and we're at the beginning of this journey, not the end.
Creating new marketing strategies demands greater investment across the board: talent, training, technology, tools, research, data and analytics.
This all costs money and if the current procurement focus on cost-cutting continues to dominate the marketing focus on growth, the media agency sector will be unable to fulfil its potential in helping clients to ignite the innovate marketing solutions that are necessary for their long-term competitiveness.
- "If the current focus on cost-cutting continues to dominate, the media agency sector will be unable to fulfil its potential in helping clients."
AUDITOR VIEW - Martin Sambrook managing partner, Billetts International
It is perfectly rational for advertisers to seek to maximise their value position in the current economic context. Perhaps the more interesting aspect is the range and extent of the deals being proposed by the agencies - and these are often well beyond the delivery of the deflationary effect one would expect as a minimum.
Whether these promises are contractually guaranteed, binding and sustainable in the long term is the really interesting question. Client perception generally is that agency groups broker the media value between their clients and between media, and they are not wholly wrong in this perception. Such matters go to the heart of the client/agency relationship and the levels of trust therein.
These are the questions that have been occupying much of our and our clients' time in 2009. For those in the agency and media owner world looking for respite from the pitches - expect more of the same in 2010.
- "For those in the agency and media owner world looking for respite from the pitches - expect more of the same in 2010."
2009: A YEAR OF MEDIA PITCH MADNESS
The year opens with Carat, which, in December, had picked up the £400 million Kellogg consolidated pan-European media account in a pitch against Mindshare, continue its good form by landing the £70 million UK Vodafone account from OMD UK.
InterContinental Hotels Group calls an £80 million global pitch out of Carat and MPG, while the new(ish) PHD network scoops the £50 million Canon account from Mediaedge:cia and Maxus.
Then good news for Omnicom Media Group as it sees off MEC in a battle for the $1 billion global HP account. Starcom MediaVest Group bags the global BlackBerry media account.
Nokia calls a review of its £300 million media account and the incumbent, MediaCom, decides not to repitch. Mindshare wins the InterContinental business, while EDF Energy decides to review its £63 million media account in France and the UK.
Ikea fires the gun on a £300 million review of its global media. It is looking to consolidate, with the bulk of the business split between Mediaedge:cia and MediaCom.
Meanwhile, on the home front, Lloyds Banking Group calls a pitch for its £80 million UK account, intending to consolidate into one agency.
The action really hots up when the FMCG giant Reckitt Benckiser begins an £800 million global review process. It might maintain its market-by-market relationships; on the other hand, it may consolidate the business. Not to be outdone, the French dairy company Danone launches into a £300 million global review process, which involves all agencies in local markets. MEC defends the £25 million UK business.
OMD lands the £72 million international Sony PlayStation account and Gucci Group calls an international media review.
Nokia's review ends with Carat winning the account and Starcom MediaVest Group nets the £50 million Royal Sun Alliance global account.
There's no sign of a high summer slowdown as Hyundai-Kia launches a $1 billion global consolidation process and Kraft conducts a market-by-market review of its £300 million business. Axa appoints MPG to handle its £150 million account after a consolidation contest against Mindshare.
Then comes the big one as Unilever kicks off a review of its £3 billion global media account. Mindshare has around 70 per cent of the business.
The largest account in the UK, the £211 million COI business, is also up for pitch. Then news emerges that General Motors is conducting a statutory review of its European media account, which is held by Carat.
OMD pulls off a coup by landing the £800 million global Vodafone account after a pitch against WPP's Group M and Carat. Aviva calls a pitch for its international media. The bulk of the spend is focused on the UK, where OMD UK has the account.
The dairy group Lactalis calls a review of its £150 million media business, while, in the UK, MEC lands the £80 million Lloyds business.
The brewer Carlsberg calls a review of its media needs across 20 or so markets, while the fashion house Burberry also puts its global media business up for pitch.
The madness continues when Coty, which just months earlier had reappointed OMD UK as part of a review of local markets, opts to review again - this time on a global basis.