New business took a significant blow in the pandemic, with the total number of appointments in 2020 down 39.2% year on year, according to AAR’s New Business Pulse.
By sector, the decline in appointments ranged from 20.9% for integrated accounts to 45% for CRM and performance.
Just five brands with a UK media budget above £20m made an appointment last year – Deliveroo, Halifax, Three, Very and Walkers – compared with 11 in 2019.
2020 was the third successive year of decline in new-business appointments and means 2020’s level of appointments was just over half that seen in 2017.
However, new-business enquiries among agencies have now returned to pre-lockdown levels as of the week beginning 1 March, AAR said.
Victoria Fox, chief executive of AAR, commented: “2020 was clearly a unique year for the new-business market and we hope that we will not see its like again. 2021 is already looking more positive and our hope is that the early signs of recovery will continue as we enter a post-vaccine world of normality.”
AAR said the sharp decline in appointments last year was a result of factors including:
Clients prioritising their own customers and internal functions over external agency considerations
Agency management teams ensuring their existing client base was over-serviced during lockdown, thus removing one of the traditional reasons for reviews being called in the first place – ie a relationship breakdown/lack of service
The inability for brand owners to physically meet potential agencies, leading to them “putting off” a potential review until normality resumed.
The last of these three factors also delayed the outcomes of some reviews that began last year and this further reduced the number of appointments in 2020.
Despite this, AAR identified factors supporting new business, including some international businesses continuing with reviews due to an existing familiarity with remote working, an increase in project-based work and new brands seeing lockdown as a positive reason to launch and exploit a gap in the market.
Fox continued: “We are anticipating that the volume of reviews will return due to a mixture of pent-up frustration caused by the inertia of 2020 and the need for brand owners to keep up with changing customer demands by adding capabilities to their marketing ecosystem (sum of internal and external capabilities). This will be either by in-housing, adding new external partners to their rosters or developing the remits of their existing agencies.
"There is little doubt that lockdown has provided brand owners with an opportunity to start to consolidate and simplify their existing agency arrangements and reassess their agency mix."