Clients underestimate agency pitch costs by 41% new Drum Network study shows
New research findings revealed by The Drum Network and Wild Heather Research have shown that clients are underestimating how much agencies spend on pitching for business by more than 40%.
The startling findings came as part of two parallel research studies conducted for The Drum Network by Wild Heather Research – one study with marketing services agencies and the other with client side marketers. In both surveys more than 100 companies took part in the research from all parts of the UK and with a broad mix of company sizes.
Agencies and clients were both asked to estimate the amount of money an agency would invest in a ‘pitch budget’ for a range of client annual budgets - from less that £20,000 to more than £1m annual client expenditure.
On average the findings showed that clients were underestimating the amount of money being spent by agencies on pitching by 41% - demonstrating that clients have little understanding of the level of investment being made by the agencies that they inviting to tender and pitch for their business.
Commenting on the findings, Jim Law from Wild Heather Digital Research, said: “When multiplied by the number of agencies involved in pitching, which we found was on average 3.6 agencies per pitch, the total amount of investment clients are asking the agency sector to make via pitching is magnified even further.
“In addition, around 60% of the agencies polled advised that they don’t fully budget for both internal and external costs when pitching, which means the ‘true’ expenditure gap must actually be greater than the 41% we saw.”
There were further inconsistencies between agencies and clients when it came to the quality of feedback clients give post pitch to unsuccessful agencies.
The findings showed that while 50% of clients say they always give unsuccessful agencies written feedback on why they didn’t win the business, only 16% of agencies said that they always receive satisfactory written feedback on where they went wrong. Likewise 64% of clients said that they always give verbal feedback to agencies by telephone, while half that amount (32%) of agencies said they always receive adequate feedback by telephone.
Richard Draycott, MD at The Drum Network, said: “By bringing our two studies together and comparing the pitching practices of agencies and clients it is clear why it remains such a contentious issue. Clearly there is still little understanding of just how much money agencies risk when they go for a pitch, which is worrying in this day and age.
"Another thing that came out of this is how important honest feedback is from the client to unsuccessful agencies, so that the agencies can at least learn something from the experience of pitching. At least if they can take some insight away from the pitch that will help them in a future pitch then it’s not money down the drain.”
The full results of the client survey are being presented to members at the latest series of Drum Network events around the UK.