Staffing Issues Cause Agencies to Be Selective About RFPs

When Angela Laubmeier, vp of corporate brand strategy at Lincoln Financial Group, led a creative review late last year, she found that 29 of the 48 agencies on her initial list declined to participate in the request for proposal process. That number was staggering—but not unexpected. Most marketers knew an influx of RFPs had oversaturated the market and created challenges for agencies that laid off employees en masse in 2020. In the pandemic's early days, agencies could make do with smaller workforces because marketers cut their budgets and work dried up. But as the economy recovered, those marketers replenished their budgets and wanted to restart marketing operations before agencies were ready. COMvergence analyzed 4,410 pitches between January and September 2021, and the accounts collectively amounted to $40.7 billion, up 80% from 2020. During Lincoln’s creative review, Laubmeier “expected a greater-than-normal number of agencies would need to ‘pass’ due to the volume of active pitches,” she said. When Lincoln’s pitch consultant, Ark Advisors, advised against inviting nine agencies to pitch, just 10 agencies were left for Lincoln to review in detail. Six participated in the review's first round, and three finalists emerged. But then, one of the three finalists pulled out of the process. The agency executive needed to attract and retain talent to her agency, and she felt it was necessary to take work that was more transformative than Lincoln’s. “Given the number of companies going to bid, selling yourself is necessary to ensure agencies feel your work is worth the time and expense to pitch," said Laubmeier, who ultimately went with Havas New York. "Agencies are being really choosy about taking on projects that are high-profile enough to lure and keep top talent.” Pitch consultancies like R3 have seen new business decreasing as a recession looms. According to R3's analysis, the average U.S. pitch value declined 48.6% between January and August, compared to the same period last year, reflecting the slowdown. But that doesn't mean agencies are in the clear. Some still don't have enough employees, and a tumultuous economy makes it hard for agency leaders to know if they should keep hiring. Layoffs made agencies more selective Agencies were declining to participate in pitches because they had more work than employees. Answering more RFPs would mean overstretching an already burnt out, dwindling workforce. “The big six [holding companies] laid off 24,000 during 2020 and then … hired 32,000 back in, so there's just a lot of turmoil in the agency process and model,” said Greg Paull, co-founder of R3. Will the economy turn the tide? Whether or not agencies will continue to be selective during the present economic downturn is “the million-dollar question,” Paull said. But he’s sure agencies are now seeking larger, more secure bets as the market contracts, suggesting they’re still carefully vetting RFPs. Pitching costs can run between $100,000 and $300,000 depending on their scale, the consultant said, a high price to pay with a possible recession on the horizon. “It's a little bit like a Las Vegas casino. They want to be placing the most sure bets they can. I think, prior to the pandemic, the mindset was about achieving quarterly goals and just securing any kind of revenue you could,” said Paull. “Now I think there's a bit more nuance to it because the talent resources aren't there the way [they] used to be.” Jessy Grossman, founder of the Women in Influencer Marketing organization and influencer marketing recruiting consultant, saw companies rush to hire back employees and then regret those hiring decisions when the hastily onboarded staffers weren’t a good fit. “Agencies used to be able to demand so much more time from people. It was just a different era. We had different expectations of work and life than we do today,” said Abbey Klaassen, president, New York, at Dentsu Creative. Today’s talent expects more When gauging new business opportunities, leaders always considered talent, Klaassen said, noting they factor whether working on the new account elicits excitement from employees and if they’ll understand how new business aligns with an agency's values and goals. But agency employees are now more selective about accounts they work on, according to Paull. Energy or technology accounts may mean agencies will “struggle to find the right talent base internally to work on it,” he added. Avi Dan, founder of consultancy Avidan Strategies, echoed Paull, and said he struggled to help an anonymous client in a questionable category entice agencies to participate in the pitch. Though he declined to name the client, he said tobacco and fossil fuel brands are categories that today’s agencies frequently avoid. At Cannes, Industry Critics Discuss How the Climate Crisis Fuels Adland’s Talent Wars What marketers can do To increase the odds that talent-strapped agencies will participate in RFPs, CMOs can be clearer about their long-term goals and objectives. Gale CEO Brad Simms asks marketers two questions right away: Is Gale getting grounded in the brand’s business? And does the brand have a measurable outcome in mind? Getting specific about how potential clients think about measurement, audiences and optimization is also crucial, he added. According to Paull, brands can avoid pitching challenges by remaining open to project-based opportunities. Establishing a clear pitch process and communicating guidelines to participating agencies is also a must. Marketers must also be transparent about the “remit and price of the pitch,” Klaassen said, noting that “if those terms change midway through the process, that might be cause for an agency to reflect on their decision to participate.” Brands Find It Painful to Address Agencies’ Most Pressing Pitching Problems

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Olivia Morley

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Olivia Morley