“Don’t you enjoy the buzz?”
This is the response I get from 90% of the advertising colleagues, when I tell them I detest new business pitches.
Mind you, I have had my share of the ‘buzz’ we experience while working on, and winning, a new business pitch.
One fine day in 2005, in our J Walter Thompson offices in Bangalore, I was working in my room. Suddenly I heard a massive commotion. My boss, Dhunji Wadia, was calling out my name, from the other end of the corridor, and rushing towards me. My strategy partner-in-crime, Navonil Chatterjee, was running towards me too. It looked like they were all running towards me. When I came out of my room, they screamed ‘we won, Shekhar, we won!’
We had just won the Nike business, after a hard fought, competitive, and long new business pitching process. It was probably the most prestigious new business to win in India that year. Navonil was so overwhelmed he literally jumped on me. I was now carrying a near-sized, fully grown man on me, for a minute or more, screaming in my ear. Everyone in the building was screaming with joy.
I hate new business pitches.
Indulge me for a moment. Consider a scenario where, let’s say, you want to decide which fancy restaurant to go to. You email 10 restaurants and say that you’d like to take your family to dinner there. Every one of those 10 invites you over for a ‘trial meal’ before the actual event, so you may pick them. You then proceed to eat 10 different meals, free of cost, at these places. They do their absolute best to win you over. The owner and the chef present their best selves to you. At the end of this process, you pick your favourite one, and just say ‘sorry, you guys made a great effort’ to the other 9.
If you want to be even more hardcore, use that same process for, maybe, hiring an architect. Scary, isn’t it? However, the reality is that this is how the advertising business (at least on the creative side) has worked, for the 25+ years I’ve spent in it. I have never come across any other industry in which companies speculatively invest vast sums of money with a minimal chance of winning.
Just how vast, you may ask. Consider this. I know of an agency in London that was pitching for a large beverage client. For the final meeting, they refurbished and redecorated one section of the office, and converted it into a full-fledged bar, obviously stocked with the products of the client. The idea was to have a ‘brand immersion’ in the agency offices, a bit of relaxation, that kind of thing. You can imagine the kind of money that would have gone into it. On the day itself, as the meeting finished, the clients informed the agency that they couldn’t stay as they had a back to back meeting, and just left after the presentation.
In another instance, an agency redecorated the entire lobby of the agency to make it look like the hotel brand they were pitching for. The walls were repainted, kiosks were purchased, the logos were added. This was for a pitch within the advertising group, so ultimately the business was going to be retained within the group anyway.
On the day itself, the clients asked to do the presentation in their offices instead.
I haven’t even mentioned the amount of money spent in extensive research, hiring experts, going out to interview people, hiring studios, flying to several places…. it’s mind boggling what agencies do. How much do you think this all add up to? Let’s take a wild (but not so wild) guess. Every significant agency in a country would have at least 5-6 pitches a year where they go all out. The typical spend on each one would be 100k USD, or more. So we’re looking at a speculative investment of 500-600k a year. This would apply at least to the top 10 agencies in the countries, if not more. That comes to about 5-6 million USD A YEAR that agencies spend, in each country, with about a 5-10% success rate. That is, essentially, money that comes straight out of the bottom line of the agencies. Imagine how much more talent (or anything else) that money can be used for.
Let’s now look at how this works out financially, even if you win. Let’s say you spent 100k on the new business pitch. The account could be worth a million dollars or so in revenue. Creative agencies (in this part of the world at least) now work with wafer thin margins, of around 10%, give or take a few. So you’ll need a year or two just to break even with this client. As this business is really fickle, there is no guarantee that you’ll retain the client for a third year. What’s worse, not all agencies have the same money, so the whole thing is disproportionate and unfair anyway, to agencies who don’t have that kind of cash.
Now consider the people angle to it. All of us ad folks do this over and above our day jobs on our client’s businesses. This, therefore, means that while you’re working on new business pitch, you’d be working 100 hour weeks, seven days, flat out. Your clients will complain that you’re not responding as quickly as usual. Your family and friends… well, forgot about them for the duration of the pitch (8 weeks on average). It takes burnout to a whole new level, known only in a few industries. The fun bit often comes when, with 3 days to go, you present all your work to the top management of the agency, who come in for a ‘review’. Let’s just say they’ll have their own opinions, specially preserved for the last minute. The whole team has to start all over again, a mad scramble ensues, just to make it in time for the final day.
All this work, agony and ecstasy, for what? Sometimes (a lot of times actually) the decision has already been made, in favour of, or against, an agency. You just don’t know it at the time. Inevitably, we find out that it was always not going to be you….. because you’re not the incumbent, or the client’s old agency from the previous job that they trust a lot was always going to get it… or because of this account management leader that they really trust from another agency… or something else. Sometimes it’s because you were amazing, but the art direction of the winning agency was better. (For creative work that’ll never be used.) The worst thing of all to hear is ‘you were very close’. Teams put their hearts, minds, blood, sweat and tears into it, purely speculatively, in this ‘all or nothing’ battle. Winner takes all, loser’s standing small. There is no such thing as a silver medal.
A lot of people are energised by it, because this is our chance of doing the work they want, where the client isn’t dictating terms, telling us what to do. I do get that, having had my share of it. But overall, it just doesn’t add up. As I grew more senior in my career, I started saying no to most pitches. Luckily I was already stretched with my existing clients, which was the perfect reason to say no on most occasions. I just couldn’t stand burning myself out for an entirely speculative, free piece of turnkey project work, when I could just spend my energy on improving a business that we already had. Never mind the Nike win and the iconic work that followed, I resented the whole idea of it. I couldn’t understand why the leaders of the big agency groups never got together and said, ok folks, this is a massive drain on our profitability, why don’t we adapt and implement some rules and principles here.
That would help, I think, create a scenario where you get the best of both worlds – you do get to experience some of the ‘buzz’ that comes from working on a fresh new piece of business, while not draining the resources and the coffers of an agency. What would that world look like? Here are few scenarios. What if:
- All new business pitches are just day-long workshops. The agency picks the talent. We organise a workshop with clients. They brief us in the morning, first thing, and then we actually work with them to come up with possible solutions. No money is spent, clients get to experience the talent and work with them, and walk away with some brilliant ideas.
- Alternatively, agencies agree on a maximum limit of spend. Let’s say it’s 5,000 USD, maximum, or 10k if you include people costs. The industry adopts a policy to invest in no primary research whatsoever, other than desk research. These spends must be recorded and shared with an industry body, or a new business management company. Every agency is held to account.
- Agencies offer up a portfolio of people that would be working on the client business, should they win it. Clients can review their CVs, meet these people, and engage in chats about how they would work on their business. It’s like an interview, or a group discussion. A decision is made on the basis of that .
- Finally, if the old way absolutely has to be followed, cut the time short. Brief on a Monday, and ask for a presentation by Friday. That itself will probably limit the amount of time, effort and money that agencies will invest in.
Could any/ some of this work? I certainly hope so. What I do think for sure, though, is that the current method doesn’t work. This is financial suicide, that drains people and devalues a precious product that agencies create – ideas. Because these are offered up so easily and for free, they just become commodities, rather than the exceptionally important intangibles that build and sustain brands. How agency leaders live with this current situation is beyond me. At the very least, maybe call for a new business pitch on designing a better process for new business pitches?
I will, in the meanwhile, continue going to a restaurant with the expectation of paying for the meal.
The silver pensieve: musings, moments and music 