Fixing New Business

Advertising is going through a lot of soul searching these days. Is the 30-second spot dead or alive? Should media be unbundled or rebundled? Is account planning still relevant? One question that has been muted and needs addressing is whether engaging in the pursuit of new business makes sense for agencies. The short answer from this corner is a qualified but resounding yes. New business is essential to an agency's health, both fiscal and from a morale standpoint. But the way it is practiced today does more harm than good, eroding financial strength and hurting morale. For most agencies, "new business" means only growth from new clients—an inefficient, risky way of expanding the enterprise, where one success for every four or five failures is considered acceptable. In baseball, batting .200 or .250 doesn't get you in the All-Star Game; in advertising, you go straight to the Hall of Fame. Shouldn't CEOs first emphasize growing existing business, with an 80-90 percent chance of success? Organic growth is easier because the relationship is already there. It is more meaningful because it deepens those ties. And it ensures that the agency is spending its resources and energy where they count the most—on existing customers. The mad chase after somebody else's clients is a symptom of a number of factors. First, agencies believe that success or failure in new business is how they are defined in the public eye. Doing a brilliant job on an account over a period of years, and steadily earning more business from the company, receives much less coverage than winning a $100 million pitch. So perhaps agency managers feel they need to chase aggressively and win to be perceived as successful. And the deeper the need to prove that everything is all right, the more irrational the pursuit of new business becomes. Agencies do that to themselves, but the press has something to do with creating that culture as well. Too much ink is devoted to new business. Reporting it is one thing. Using it as a tool to evaluate performance, sometimes superceding such key pillars as creative prowess, employee retention, training and client retention, is another thing. Finally, the evolution of the business from private to public companies means accelerated growth through pitches is favored over more measured organic growth. Don't get me wrong. I am not against participating in pitches, especially those that can result in a significant windfall. But I believe that agencies can control costs and grow more wisely by relying less on pitches for a revenue stream and more on organic growth and project work as a new-business approach. In fact, I believe clients should be more interested in engaging agencies in project work. The pitch system is an artificial, poor way for a client to measure an agency's talent and compatibility. A two-hour pitch leaves judgment about chemistry at best a guessing game. A project allows for a deeper assessment. Running from a singles bar to a chapel doesn't work. Just ask Britney. Better live together for a while first. Some believe that clients are perpetuating the current pitch system because it is a cheap way of getting free ideas. I don't believe that. I believe the overwhelming majority of clients truly look for a business partner and are led to believe that a pitch is the "fairest" way to look for it. But fair to whom? Certainly not to themselves, if they have to repeat the process every four years or so. The length of the average client-agency relationship is the shortest it has ever been, which shows that the current new-business system is not working. We need a new definition of new business in an age when spending on marketing services outstrips that of traditional advertising. Greater focus on organic growth means that agencies, and in particular account managers, need to understand all communications spending, not just advertising, and all communications needs of the businesses for which they are providing stewardship. They need to become "chief growth officers" for their brands while also acting as new-business directors who are able to grow revenues. And new-business directors need to focus not just on revenue growth but also on how that growth can be achieved efficiently and without waste. Agencies approach too many new-business opportunities as they would the roulette tables in Las Vegas. As an industry, we always lament our willingness, which bewilders outsiders, to give our ideas away for free. But the truth is even sadder—by putting so many resources into a pitch, we actually pay to give those ideas away. That is beyond crazy. New business needs to be redefined and made more efficient. Pitch less, and spend less when you do. Seek more project opportunities to engage clients. And focus more on growing organically, sourcing new business from existing accounts and adjunct marketing-services opportunities.

Brand Marketing

Fixing New Business

Adweek Staff

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Adweek Staff