I am, and always have been, a big fan of the Institute of Practitioners in Advertising (IPA). I think they do a great job as a trade organization that represents only a fraction of providers. Despite this encumbrance, they have some excellent initiatives to drive best practice in our sector. I went on my very first training course with them as a callow, young account executive (it was on public speaking, which I still hate, so they can’t work miracles).
The IPA just published two really interesting pieces this past week. First was their influential Bellwether report, which measures confidence amongst UK marketers. In their words, the report “reveals a strong upwards revision to marketing budgets, marking the fifth quarter of consecutive growth and the second-highest rate of growth in the survey’s history. This latest report indicates that companies are loosening their purse strings as worries about the wider UK economy subside”.
This is manna from heaven for agency providers who are usually at the leading edge of economic cycles, and very much in keeping with the experiences of gyro’s UK-based operations.
One of the other ‘leading indicators’ in our space is the amount of activity around agency reviews, so I was also very interested in the IPA’s recent ADAPT report – part of an initiative involving UK-based advertisers and agencies that looks to improve output through better collaboration.
Unsurprisingly, their work shows the wastage and negative outcomes associated with ‘pitching’. Agencies have been bitching about this process since time began. When I started out, Martin Anderson of BDH (TBWA) was a prominent standard bearer, but fast-forward 20 years and the problem still exists. As review activity picks up, these problems come to the fore once again, making this research very timely.
In short, the report proves better client/agency alliances drive better commercial outcomes. Whilst I doubt there is any sane person who would challenge this premise, few ‘walk the walk’.
I presented to a large global FS client last year and challenged their 70-strong marketing team to estimate the average cost of a pitch for an agency. (It’s about £140k – large agencies £178k; medium £90k; small £65k). Staggeringly, most of them underestimated the cost by a quantum of around 100 – yes, 100, not 10 (i.e., less than £2k).
If I was being adversarial, I’d say, “So what?” If a business can’t put its own house in order, then that’s not the client’s problem.
However, what the ADAPT report shows is that the dysfunctions are a little less one-sided. As I explained to that group of shell-shocked marketers, those costs have to be absorbed somewhere and are reflected in our (oft challenged) hourly rates.
But ADAPT also highlights the fact that pitches cost clients around £32k. Not insignificant. There are equally important but softer dysfunctions too. For example, clients estimate that a period of six to nine months is required to ‘bed in’ a new agency partner and start generating optimum outcomes. This learning curve comes with a cost.
One other blindingly obvious (but hugely pertinent) point the report stresses is that better relationships drive better work – some 37% better, when they correlate relationship key performance indicators with creative measures. There are some great examples of the commercial benefits of long-term partnerships in the report as well.
This touches on some other absolutely critical ‘known knowns’. We all instinctively know that ‘creativity works’ but suffers from that phenomena – often attributed to Henry Ford – about not knowing which parts or why.
This week alone, as the retail sector experiences very mixed fortunes, Burberry posted big sales uplifts attributed to marketing expenditure. Again, the IPA has produced a really robust, in-depth study around this, although one you’d need to pay to read.
It aligns creativity (measured by awards) with effectiveness, debunking the theory that the desire to win creative awards runs counter to the need to deliver a return on investment.
At gyro, we carry out our own work to better understand why more emotional (or humanly relevant) B2B communications deliver better business results, especially in a space that traditionally leans toward rational messaging.
So that this piece doesn’t read like a job application for the IPA, my final thought would be this: A stronger trade association would help deliver a better multilateral response to the practice of pitching, which, we all know, often doesn’t work well for either party. It’s no surprise that some of the biggest agencies with the biggest brands, who are delivering the greatest returns for their clients and stakeholders, are the ones that refuse to pitch.
Danny Turnbull is the managing director of gyro Manchester.
Follow Danny @turnbulldanny