Ditch The Pitch: Dysfunctional Agency Selection Process Costs $12.5 Billion Per Year

It’s time to ditch the pitch. Agency reviews and the dysfunctional process that accompany them cost agencies and (by proxy) their clients a whopping $12.5 billion per year. That amount nearly equals the revenue of the third largest global agency holding company. It’s no wonder why 76% of U.S. CMOs indicate their company’s overall 2023 marketing budget is HIGHER than 2022. Marketers are indirectly funding pitches.

The Agency Selection Process Is Broken

Beyond the costs, the process of selecting an agency is untenable. Procurement-driven reviews often disqualify perfectly capable agencies with cost-only criteria. Seventy-six percent of chief procurement officers prioritize reducing costs. The marketers in charge of managing their agencies often come to the process without adequate preparation. Agencies themselves over invest time, materials, and human capital in high-pressure new business activity. And despite the best of intentions, the conventional consultant-led selection process is lengthy, laborious, and over engineered. As one media agency growth executive articulated the detrimental effects of agency selection:

“During Pitch-a-palooza in 2015 my new business team logged 90,000 hours for pitches in the first six months.”

Ditch The Pitch For Paid Projects, Instead

It’s time for brands and agencies to stop the cycle of continuous and costly agency selection for a more equitable, effective, and enduring marketing partnership. Clients complain that the seasoned agency pitch team doesn’t end up being their day-to-day account team. Agencies complain about giving away so much of their IP in the form of “spec work.” The answer? Reframe pitches into paid projects. Design paid projects to facilitate agency selection rather than allowing gratis proof-of-concept collaborations where neither party has real skin in the game. Clients complain about service. Agencies complain about margins. Rather than severing the relationship, focus on preserving it by scoping and compensating pitch consultants to help manage the ongoing productivity of client and agency alliances — not just the selection. In this model, pitch consultants become partner consultants, leveraging years of consulting experience to help CMOs select and maintain healthy working relationships.

When marketers, procurement, consultants, and agencies begin to think and operate in these terms, they’ll find there are a number of elements of the selection process that can be re-evaluated and re-structured. For example, the preparation before a selection. The amount of time spent making the evaluation. The financial arrangement during and after selection. The criteria for the selection and the on-going OKRs throughout the relationship. The ownership and transfer of IP. The project team versus a pitch team. Imagine the implication of well-reasoned, shorter, paid projects that result in long-term project or retainer relationships as part of a marketing transformation strategy?

Focus On Relationship Management, Rather Than Margin Management

Strong brand + agency partnerships provide important benefits to marketers, including alignment with company culture and the gratification of a shared purpose, a complementary roster of marketing partners that understand their remit, and a mutual value exchange over the life of the partnership. Ditching the dysfunctional pitch process is a win-win for brands and providers and everyone in between. Careful preparation prior to selecting a partner, a short selection process, and more rigorous partner management will lead to fewer, shorter, and more successful agency reviews.

This post was written by VP, Principal Analyst Jay Pattisall and Principal Analyst John Arnold and it originally appeared here.