As the global pandemic took hold, agencies around the world found themselves in unfamiliar territory, with new business iced over to a degree no one had ever experienced. As the course of quarantine changes, so does the discussion about what revving up agency life looks like, including, most importantly, business development.
While in motion before the pandemic hit, Walgreens Boots Alliance’s decision to officially launch a global review of its creative and media accounts this week could mark the beginning of a wave—or at least a splash—of new business opportunities. In one midsize agency’s case, after weeks of silence, it found new business prospects beginning to build.
Adweek spoke to three consultants and six business development executives at agencies ranging from large holding company shops to independents. What emerged was a murky picture of the current landscape.
However, the green shoots of progress—including the restarting of pitch processes—signal that there is a thaw. Where opinions vary is to what extent new business will accelerate (and when), and how the RFP process will change, either temporarily or permanently.
One consultant said they have started to see RFPs picking back up and predicted that things would begin to “heat up” in the coming weeks and months. They added that things would “get back to a normal flow” once the majority of people are back in an office setting, predicting that pharmaceutical and retail spaces would be quickest to return. However, some business development and client leaders believe the current activity was pegged to in-process RFPs and pitches before quarantine were instated, and that Q3 and Q4 could prove to be very busy.
‘There’s a lot of wishful thinking’
Avidan Strategies founder and CEO Avi Dan is skeptical that new business will meaningfully pick up before late summer or even into the latter part of the year. He predicted that packaged goods and “defensive categories” would return more quickly than other categories.
One agency’s new business leader predicted brands that have been able to capitalize on being staples during the crisis would return to spending most rapidly, followed by brands associated with vices or craving.
“Brands that can understand that consumers are going to be fundamentally changed from a values standpoint can take advantage of those change of values,” they said.
“Companies are not back yet. When they get back, there will be an assessment of where things stand,” Dan said. “That will be at least a 90-day process. I don’t think hiring an agency or replacing an agency is at the top of anyone’s list of priorities.”
“There’s a lot of wishful thinking from agencies and consultancies,” he added.
Dan suggested that, in the short term, clients were more likely to review media accounts as they seek to cut costs and find greater efficiencies with media budgets. He stressed that even in that case, such reviews likely wouldn’t pick up much steam until the heat of summer has arrived.
Dan also stressed that the impact of the coronavirus pandemic would accelerate existing trends such as in-housing—particularly with programmatic media—and shape what clients are seeking in an agency.
“There are significant changes in the business when you have a situation as catastrophic as this,” he explained. “Even 2008 wasn’t as bad. This is something different. It will reshape the entire industry.”
In particular, he said clients would seek agencies that could aid in digital transformation and with expertise in ecommerce and user experience. Overall, he said one premium tier of agencies would emerge that can charge clients large margins, while everyone else has to compete on price.
One business development executive cautioned that smaller agencies could get sucked under. The main issue of extended payment terms—such as if a client went from 60 to 120 days—could be too much to overcome.
“They live and die on cash flow,” they said. “It’s not about their ability or talent. They need the cash flow because they have to pay rent and their people.”
Dan also predicted the pandemic would fuel the consolidation of media agencies at holding companies.
“There are too many media agencies. The holding companies are trying to drive efficiency, which means they’ll start combining media agencies,” he said.
One agency executive also noted that brands will likely look much closer at their agency relationships. Counter to Dan’s assertion that brands will stay put with agencies, a reassessment could include how a shop served a brand during the pandemic, and if, in fact, it has the right tools. If the end result is not an overwhelming “yes,” then there could very well be a run on agency reviews.
Ready, set, sprint
Mirren managing director Brent Hodgins noted that brands have “come through the shock and processing of emotions that occur in a sudden market shift and are ready to start taking action to rebuild for growth.”
Just as quickly as things stopped a couple of months ago, the restart is as brisk, with brands compressing the process. In one case, an agency executive explained that an RFP and pitch process that would have usually taken three-and-a-half months was done in about three-and-a-half weeks.