The general perception in the agency community is that the new-business landscape is a barren place these days. But that perception lags reality, according to an exclusive Adweek analysis of review activity since the ad recession began in 2000. The analysis, which tracks searches involving accounts billing $20 million or more, reveals that there were more reviews in the first seven months of this year than during the same period in 2001.
While more numerous, this year's reviews have involved less money. From January through July, U.S.-based marketers held 57 reviews totaling $4 billion in billings, compared to 47 reviews totaling $4.5 billion during the same period in 2001.
That's a better scenario than many would believe. "If I roll up the comments of all of my peers, colleagues and clients, [they say] there's definitely a slower pace of clients seeking new agencies," said Richard Roth, president of New York search firm Roth Associates.
But others see things beginning to stir. Judy Neer, evp/managing partner for Pile and Co. in Boston, believes new business is "slow but building." And Arthur Anderson, managing partner of New York-based Morgan Anderson Consulting, notes a "substantial increase" in review activity since the year began.
Recovery is not in full swing, of course, and the blistering pace of new business in 2000 is a distant memory. (From January through July 2000, there were 77 reviews totaling $8.4 billion in billings.)
The analysis makes clear that accounts in play in 2002 are smaller, and clients are spending less. For all of 2000, more than $17 billion in billings was put in review, led by General Motors media planning ($2.6 billion) and Chrysler ($2 billion) reviews, and virtually all that business landed at new shops. That total is unlikely to be matched in 2002, no matter how much things pick up.
The analysis also suggests that besides the general state of the economy, a key contributor to the downward spiral of new-business opportunities is the collapse of the tele- communications sector.
The category was the second-largest contributor to reviews in 2000 at $2.3 billion, behind automotive, at $5.1 billion. The category remained in the top five in 2001, at around $1 billion, tied with media and pharmaceutical and trailing automotive ($1.2 billion).
But telecommunications dropped out of the top five completely this year, with just $200 million going into review so far. The category leader has been food, at $600 million.
The analysis also reveals that the percentage of reviews involving roster agencies has increased considerably. From January 2001 through July 2002, 33 of 160 reviews, or about 20 percent, involved incumbents only. In the first six months of this year, in fact, one out of four involved only roster agencies. (This includes shootouts where only two agencies competed, and does not include competitions where clients entertained agency pre sentations without a review process of RFPs, etc.)
This finding is most likely due to the wave of media reviews over the past two years, most of which involved buying and planning consolidations. More than half of the roster-only reviews were for media buying and/or planning assignments, and even as the economy tumbled and new business withered, clients reviewed their media activities.
In 2000, the percentage of searches involving media services only was 16 percent (22 out of 140), for a total of $8.1 billion in billings. In 2001, 29 percent of reviews (24 out of 83) were media searches, totaling $4.6 billion. So far this year, the figure is 21 percent (12 out of 57), totaling $1.8 billion.
Some observers believe the rise of roster-only reviews also reflects new client realities. "I see a decline in traditional search activity but an increase in clients wanting to get in better alignment with their current agencies," said Anderson. "It's becoming a lot more than just picking a new agency. Clients are becoming much more interested in the value side of their agency relationship."
And some say that while the quantity of new-business opportunities is better than many in advertising might believe, the quality still shows the effects of the general economic climate.
"This is the year of what I call the 'Government Phone Book RFP,' " said Russel Wohlwerth, principal at Select Resources International. "Agencies are being asked questions totally irrelevant to the search—typically, 200 questions that need to be answered in 48 hours."