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How Did Three Incumbent Agencies Hang On to Their Business?

Pitches for Porsche, Honda and HSBC

Historically, incumbents have at best a 10 percent chance of retaining business in review. So when three agencies in the past three months—Cramer-Krasselt, RPA and JWT—cheated death in pitches for Porsche, Honda and HSBC, the industry took notice, particularly given the circumstances of the searches.

“Incumbency isn’t what it used to be,” said Mike Sheldon, CEO of Deutsch LA. “If you had a one out of 10 chance” of survival as an incumbent before, “now you have a one and a half out of 10 [chance]. So it’s marginal.”

Still, these are big brands that collectively spend more than $1.2 billion in media annually. As such, they are big exceptions to the rule. The unusual outcomes flow from the incumbents’ deep knowledge of their clients and lackluster competition.

Going into their reviews, Porsche, Honda and HSBC seemed invested in change. Each hired an outside consultancy to solicit proposals from myriad shops before narrowing the field to a few finalists. The searches were exhaustive: HSBC’s and Porsche’s lasted five months and Honda’s three months.

That said, the existing agency relationships were long-standing, which meant the incumbents generally knew more about the brands than their opponents, giving them an edge, said participants.

Cramer-Krasselt had worked on Porsche for six years, and although the automaker was open to change, inviting four other shops to pitch its account, the others failed to stand out, said a source.

“It’s sort of like the prize fight in that you really need a convincing knockout to compel one to change the resources,” the source added. “I don’t think you’re going to hire somebody that’s marginally better. If somebody is demonstrably better, that’s reason for change.”

Similarly, most of RPA’s challengers in the Honda pitch—including 72andSunny and The Martin Agency—didn’t set themselves apart. As one source put it, “They didn’t fall short, but they didn’t trump RPA.”

The one that did—Mullen—walked away with sister brand Acura, which RPA handled prior. Media planning and buying, which was pitched separately, also left RPA, for MediaVest.

So while RPA kept the core Honda brand, which it has had since 1986, it lost other pieces of business. Likewise, JWT kept HSBC’s global brand assignment, among others, but now has company. Grey is co-lead and Saatchi & Saatchi is a third player.

In contrast to Honda and Porsche, HSBC’s review focused primarily on resources, operations and cost. Also, the process stemmed from a broader reorganization at the bank under CEO Stuart Gulliver. “This wasn’t a creative beauty parade,” said a source. “This was about working together.” But even after eight years on HSBC, JWT had to prove itself at each stage of the search.

HSBC “ran a competitive process, and they won,” the source added. JWT “had the institutional knowledge, but clearly being forced to rethink what they do can be a good thing” for HSBC as well.

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