Is Agency New Business Back on Track? It Depends on Who You Ask

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. [article_summary section="1"]“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. [article_summary section="2"]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. [kickout id="1"] “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 [article_summary section="3"]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. [kickout id="2"] “New projects are getting approved faster than we’ve seen before,” noted Hodgins. “[Brands] are looking for efficiencies in the RFP process to get things approved and produced faster, and I think they are going through a process of streamlining their approach to get work into the market as quickly as possible. There are some positives with that.” A possible negative for agencies, according to Hodgins, is that meaningful access to clients may suffer if a new paradigm with remote pitching sticks. “It’s an exciting time to be in procurement right now,” he said. “These executives are using this period to establish an even more efficient process for RFPs and building their case with marketing clients that there doesn’t need to be as extensive a back-and-forth [between an agency and prospective client].” On the flip side, however, Hodgins believes that the time spent away from the office, meetings and dinners may result in more humanity in the process—such as kids interrupting Zoom meetings—as people work from home. “Clients want to connect in a human way more than before,” Hodgins said. “They’re willing to give agencies a little more latitude in terms of having a few kinks in their presentation. "But I think they're also looking to see how agencies handle those," he added. "So, how agencies handle a child walking into the room. Maybe a lag in the audio and video—and is the person presenting able to keep it together and maintain their focus? Or do they completely collapse and demonstrate they don't have the strength of character that ultimately the client is looking for? It's a bit of a test.” The view from one agency [article_summary section="4"]Johannes Leonardo’s head of business development, Ben Myers, described what he called an “interesting progression” since mid-March. Myers said at the beginning of that cycle, new business was “surprisingly heavy,” speculating that marketers may have accelerated timelines to make decisions ahead of the worst of the pandemic. A couple of weeks into widespread work-from-home measures, however, new business started to “dive off,” he said, as the full scale of the seriousness of the pandemic became apparent. “Everyone hit the pause button, and started reassessing where budgets were going to land, who should be advertising, [and] who shouldn’t be,” he said. More recently, Myers said he’s seen brighter signs of new business developments start to emerge with the blossoming spring, including some encouraging calls with potential clients. [kickout id="3"] “The shift has been brands that need some sort of a transformation,” he explained. “The type of work that we are engaged in rests in that big, bold, brand media-agnostic idea. We are starting to get those kinds of RFPs coming in.” “What I’ve been encouraged by is the level of efficiency, the level of transparency and directness, the level of clarity everyone seems to be absolutely comfortable asking for right now," he added "I think that’s going to be a strong thing for client/agency partnerships.” “The travel expenses that agencies spend on pitches, all that is going to change,” one consultant predicted, as “clients become more sensitive to the needs of agencies” and the considerable expenses of new business pitches. One agency marketing executive concurred, noting that it is “considerably more efficient not to have to fly on our dime.” Additionally, the saved time can make the agency “much more efficient by simply not having to fly, and the expectation removed from worrying about it” in the first place. Myers said some of the best pitch work he has seen in his career has come out of the current moment. “I think that is due to the best creative talent in the business, the extremely talented people who work in the agency and want to crack the problem,” he said, also citing access to agency leadership as “a very real and genuine thing that guides the work” and has been even more prevalent under the current situation. As a result, he thinks agencies and clients alike will be more flexible about work processes going forward. He predicted a particular breed of agency would emerge stronger from the current crisis. “Agencies confident enough in what they’re going to be able to sell,” shops that understand clients' business problems and can “ask questions that will get them their answers” will come out stronger from this, he said.