Whether it be the creative or media space, price-led pitch wins sparked from frantic and somewhat scurrilous “pant-dropping” remains a very real issue, and it’s being brought into focus by the explosion of global media pitches being led out of the US. Many of which are said to be procurement led.
According to Whybin\TBWA Melbourne’s newly appointed CEO Kimberlee Wells, procurement-led negotiations are murdering creativity.
She said integrating channels is a difficult thing to do in practice, because it’s timely – adding that “procurement led negotiations are killing the creativity in our business”.
The same is true of media. CEO of independent media agency Slingshot, Simon Rutherford, agreed that slashing costs to scoop business is not a wise move.
“Reducing your prices just to win pitches isn’t sustainable, and just puts your agency and staff into a bad position, because you have to start looking where you can recoup dollars before you even start,” Rutherford said.
“We’re in the service industry, so it’s important that our clients value the service we provide and the agency can afford to provide a great service.
“No-one wins in a price war –not the client, not the agency and certainly not staff.”
The number of brands here and abroad that have called media reviews over the last few months has sparked waves of rumours and scuttlebutt as to why – and announcements of such reviews keep on coming.
Some commentators specualte that many won’t even result in accounts moving, but will largely drive prices down. First dubbed the ‘mediapalooza’ by overseas media and adopted by some here, local billings for media accounts up for grabs are said to be up to the $250 million mark. Globally, this runs into billions, with estimates hovering around US$10 billion.
However, CEO of Match Media, John Preston, said many of these global clients haven’t reviewed for quite some time – firstly due to efficiencies, and secondly because the market has experienced immense change.
“They are spending an enormous amount of money on a global level, and can one agency partnership derive more financial return back to their business? That would be the procurement component,”said Preston.
“The second part is because the market has changed so much over the past three years and will continue to change, quite dramatically. I think what they [clients] are seeing is quite a significant volume of dollars shifting to digital, and specifically into programmatic, and that area of digital, data, technology, programmatic buying all wrapped into one, I believe, is confusing to a
lot of the major clients around the world, in the sense that it’s not 100% transparent to them, in some cases.”
He said it’s something clients need more education around, adding that brands have to reignite trust with their agencies to ensure they are getting the best advice.
“So, probably what’s driving this is just a look around to see if there is a better informed agency, a better approach to technology, data and programmatic.”
A version of this story appeared in the latest issue of AdNews magazine (24 July). You can get it right now in either print or on your iPad by clicking right here.
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