No Consultants Required

The recession, emerging media channels and client procurement practices have combined to reduce the percentage of new business pitches led by search consultants, according to agency executives, trade organizations and even some consultants themselves.

At the same time, just as with agencies, marketers are pressuring consultants to cut fees, sources say. Consultants are responding by diversifying their offerings beyond their core search practices.

During the last three years, the number of publicly disclosed agency reviews launched by clients nearly doubled, according to a database compiled by the American Association of Advertising Agencies. During the same time, the percentage of pitches that were led by search consultants fell by nearly half. (See also: "Signs of New-Biz Life.")
 
The 4A's database, covering 2007-09, includes reviews reported in the press as well as data supplied by 4A's members on some but not all of the new business pitches that they participated in, according to Tom Finneran, evp at the New York-based organization.
 
The database shows a total of 343 account reviews in 2007, with 134 of them, or 40 percent, led by outside consultants. In 2008, there were 357 new reviews, but consultants handled only 33 percent of those. And last year there were 644 pitches, with only 23 percent led by a consultant.
 
"We've seen an increase in reviews that have occurred without the benefit of a consultant," said David Adelman, CMO at WPP Group media shop Mindshare. "I think it's more than a coincidence," he said, adding that many clients have come to believe it's a role they can take on themselves through procurement "to forego the additional fees."
 
Finneran at the 4A's agrees. He stresses that the organization's account review database is not "definitive," but does provide, directionally, a picture of what's occurring. Increasingly, he said, client procurement groups "view agency search as a core competency of what they do. In many client organizations they have become involved in the process and disintermediated the search consultants."
 
Agencies say the impact varies, depending on individual client procurement groups and their experience in dealing with and knowledge of the agency world.
 
"Having been through a lot of reviews without consultants I've come to appreciate what they bring to the table," said Adelman. Some consultants, he said, "do a wonderful job of maintaining a level playing field so that all the agencies know what is expected of them and what the rules are." They can also keep the client engaged, making sure the right people show up at critical meetings and provide proper feedback.
 
But a client-led process can be fair and acceptable, says Steve Farella, CEO at Targetcast:tcm, the New York-based agency. The best client-led pitch processes usually have equal input from the procurement and marketing teams, where procurement "establishes the process, keeps it on schedule and negotiates the fee, but refers to the marketing group as the client. So the marketing group brings in the level of professional need and selects the agency. That process tends to work," he said.
 
The process becomes problematic, said Farella, when the client search team lacks experience with the agency world and "asks for too much information or the wrong information."
 
Natira McDermott, vp of business development at Initiative, likens the encroachment of procurement teams into the search process as tantamount to pitching to two "very different" clients in the same review. "It's a balance of being able to connect with both of them," she said, referring to the procurement and marketing teams.
 
"We have had some successful pitches that are procurement led, but we've also pulled out of other pitches," said McDermott. One issue is that sometimes access is reduced to the marketing team when procurement leads the pitch. That's not good, she said, because it reduces the ability "to know what the CMO or the media and marketing teams' real objectives are."

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