Facebook, Dyson and Coca-Cola are all currently reconsidering their global media accounts. But rather than simply being cyclical, these huge reviews suggest a pattern of brands trying to squeeze more out of their media partners amid Covid-19 shockwaves. So, what is it they actually want from a new school of planners and buyers?
2021 is looking to be a flashpoint for pitches. Brands with enormous spending power and vast portfolios – including Coca-Cola, Facebook and Dyson – are reviewing their global media accounts as the thaw from the pandemic continues. Unilever, too, is gearing up to put its North America and worldwide media buying accounts out to pitch.
The billions of dollars of business now up for grabs bookends 12 months in which media agencies have been forced to reassess their own strengths and weaknesses as clients have marched ahead with media transformation at lightning speed.
A recent study from consultancy MediaSense, in partnership with the Incorporated Society of British Advertisers (Isba), reveals that while 65% of UK chief marketers and directors believe they have the vision and leadership to transform their media strategy, few feel equipped in specialist areas. Just 35% believe they have an adequate grasp of the technology needed to do so, and less than half (48%) believe their business has the right people and skills to drive their plans forward.
What’s clear is that clients are hungry for expertise, and that agencies are lagging behind. A shocking 57% of marketing bosses admit their agency model is hindering their own transformational progress.
And so, after a quiet 2020 in terms of pitches, the industry is now facing significant upheaval in the media agency market.
Brands are frustrated, they say, by old business models, rigid processes and opaque tools. They want flexibility from their media partners, along with access to first-party data and a comprehensive skillset that covers everything from adtech to OOH to e-commerce.
With fresh opportunities now springing up for both incumbent holding companies and promising challengers, The Drum explores what the deal is with all the global media pitches and how contenders can nail that pitch to CMOs in flux.
Agility, data and e-commerce
David Indo is chief executive of ID Comms, which manages huge pitches for global brands – including Facebook’s current $750m media pitch. He says that most of the reviews on the horizon are the result of a “perfect storm“ of partnership cycles naturally coming up for review coupled with extensions to existing cycles secured amid the pandemic.
“The last real explosion of pitches was during ’mediapalooza’ in 2015, when £30bn ($42bn) was spent. We were anticipating last year to be another £25bn ($35bn) pitch market, but it was in fact just £6bn ($8.4bn) because of Covid-19.“
He says a majority of CMOs paused pitches or extended contracts with incumbents when the pandemic took hold.
“And so what you’ll find this year is that not only do you have pitches that were paused last year, you’ve still got the natural cyclical pitch market. It’s going to be fairly congested.”
While this build-up goes some way to explaining the review flashpoint, there is something going on under the surface causing big spenders to re-evaluate their current relationships.
There are consistent diminishing returns in terms of spending to achieve indiscriminate scale through auction. Instead, brands are focusing more on strategic partnerships with agencies that align with broader business priorities.
The pandemic saw certain audience trends rapidly accelerate around the world. E-commerce is the most notable, with estimates that years of growth were condensed to a few short months. That has led to huge demand for e-commerce and data specialists within media agencies as brands expect to ride that wave out of the pandemic doldrums.
Laetitia Zinetti, the managing director for continental Europe at Ebiquity, says media shops that can demonstrate expertise and flexibility will win big in this upcoming round of pitches.
“There is willingness to actually consider media agencies as business partners, while targets are obviously changing towards more business outcomes than just successful media KPI.“
In short, as brands become leaner and more self-sufficient, they want partners that complement their own model and provide the supplementary capabilities that stack up against business objectives.
Linking ROI to business objectives
Global ad spend is forecast to grow by 5.8% globally in 2021, according to Dentsu. However, despite positive signs of momentum on the horizon, a return to pre-pandemic levels is unlikely until 2022, when investment is set to reach $619bn and grow 6.9%.
With chief marketers still tightening their belts and under pressure from the rest of the C-suite to show their worth, analysts say that, more than ever, clients want to cherry pick media agencies that can demonstrate tangible ROI.
Craig Stein, senior consultant at indie pitch consultancy R3 in North America, says clients have had to prove the ROI of their investment. “The pendulum has swung to performance, not just reach. Every dollar spent has to have been proven out.“ The agencies he has seen succeed in pitches lately have clearly presented a plan to build out practices that link ROI to business objectives.
Amid the growing loads marketers are carrying, it would be remiss to discount the impact of cost reductions in the face of those diminishing returns at scale. Cost, it seems, will always play huge role in the media review process, the latest frenzy included.
Last week, Publicis Groupe chief executive Arthur Sadoun told The Drum: “Clients want agencies that can help them shift away from third-party cookies to maintain direct relationships with consumers.
”They also want to strike the right balance between paid media and owned. Lastly, they’re looking for efficiencies, because at the end of the day they need results. These are the three things that are common to every pitch right now.”
To that end, 2021 will likely see a refinement in how brands think about hybrid models and in-housing. Clients increasingly see agencies as playing a consultative role, which from an incumbent agency perspective allows them to deepen their relationship. Holding companies in particular are set to have to change as brands increasingly want integrated solutions.
Indo agrees. “The way that the agencies are having to innovate and iterate is to be more strategic consultative partners, which will take us back to the days of Mad Men.
“Once they do that, they become part of the fabric of the marketing organization and there won’t be any need to pitch every three to five years, because there won’t be the commercial opportunity there.”
The altered pitch
Over the past year, agencies – already strapped for resources – have been increasingly wary to commit to the pitch process. Now, however, many have little option but to content.
At the same time, brands have been looking to change the way they approach pitches remotely, with Indo noting that a lack of the chemistry meeting can be an impediment to any final decisions – something agencies competing in this round of pitches should be aware of.
Many clients are now offering challenges to agencies following the RFP, which aim to test their ability to align with broader business priorities.
Zinetti says Ebiquity is encouraging ‘tissue pitches’. “We’ve been organizing virtual workshops with the all the participating agencies to really show what it would be like working together. We are looking at the moment with the client for a tissue pitch, having hack days, where the agencies can really put a campaign together within 24 hours and show the full process.”
Stein believes that, as a hybrid virtual-live pitch process becomes more common, it could help provide parity for smaller agencies that would not necessarily be able to compete around the showiness of more traditional pitches.
“Smaller agencies might not feel that they are at a disadvantage because they don’t have the pretty office or they don’t have the really great sound system. Pitch theater is quite valuable, but it does sometimes take away from the actual content.”
The media reviews lull is well and truly over. And while we wait to discover the big winners, what’s clear is that for the agencies that focus on flexibility, that help CMOs highlight the true value of their media and act as strategic partners, will be in with a fighting chance.