The latest results from the JFDI New Business Barometer, based on research from Opinium, demonstrate that agencies of all sizes are altering their priorities in response to industry trends. The report, based on a survey of 126 new business respondents in UK agencies, shows that the focus of small, medium and large agencies are diversifying, both in terms of seeking and winning new business.
Large agencies – those with over 150 employees – are transitioning towards filling their pipeline as opposed to growing existing client businesses, for instance. While in 2017 36% of large agencies reported growing their existing clients was a key focus, only 4% reported the same in 2019. By contrast, the percentage of large agencies seeking to find new opportunities has risen from 29% to 69% in the same time period.
Despite that, large agencies are pursuing fewer new opportunities than they did in 2018: the report demonstrates that large agencies are pursuing 37% fewer opportunities, while the average number pursued by medium agencies has more than halved. Additionally, converting pitches was the priority for only a quarter of agencies in 2019, declining from around half the previous year.
More than half of large agencies are pursuing fewer than 30 opportunities and, crucially, the value of those individual opportunities is reported to have fallen too. The average total value of opportunities has fallen by 23%, according to the 2019 respondents.
The challenges for medium-sized agencies are different, though very familiar to members of The Drum Network to whom we’ve spoken. Medium-sized organisations (those with between 50-150 employees) are lagging behind their small and large counterparts when it comes to converting pitches. The report demonstrates that while they are receiving more pitch opportunities they are only converting those opportunities one time in three (36%). Comparatively, both small and large agencies are outperforming them, hitting 42% and 47% respectively for pitch to win.
Additionally, 70% of medium agencies are failing to capitalise on an important prospecting strategy - client referrals
Mark Clark, managing director of JFDI, said: “The uncertainty for all businesses over the last 12 months is to be expected and evident within the agency sector. Regardless of size, all agencies are looking for ways to get smarter about how they go about new business. They are focusing their prospecting strategies, investing more in marketing-led engagement and targeting higher value opportunities.
“But despite these sharpening up of best practise, they are all are still leaving millions of pounds on the table un-won. Those agencies that convert more than they lose still have a competitive advantage in terms of cost of new business. And therein lies the opportunity for 2020.”
The reasons given by agencies for why their pitch process frequently fails are also likely to be familiar. 38% of respondents note that a lack of feedback (“we are rarely given detailed reasons”) is a key challenge when it comes to refining and altering their pitch strategy. That number has risen sharply over the past few years – from 24% back in 2017 to being the most commonly cited challenge. The next most commonly cited reason – the budget being withdrawn – was cited as an issue by 33% of respondents, and remuneration terms being unacceptable by 21%.
Josh Glendinning, associate director at Opinium said: “Where previously the industry was marked by clearly defined and consistent roles and budgets, there is now real confusion. Agencies that were previously in distinct disciplines are often fighting over the same budgets and new business professionals are having to become a lot more commercially savvy in pursuing opportunities.
“And it is all the more difficult for agencies to adapt to these changing demands when two in five are not given detailed feedback on pitches and proposals.”
The realities of hiring dedicated teams for pursuing new businesses was also brought into stark focus by the report: while smaller agencies typically have CEOs or other managers who perform the roles associated with a new business team, there is no appreciable difference in the size of new business teams at medium and large agencies.
Unsurprisingly, Brexit and the continued uncertainty around the UK’s future trading relationship with the EU was also commonly referred to as being a particular challenge for agencies in 2019. When combined with the oscillation between specialisms and generalists – and the ongoing trends around inhousing – there is also considerable confusion in the market more generally, which undoubtedly affects confidence when it comes to pitching for new business.
For more information on the JFDI New Business Barometer’s findings, visit http://www.jfdi.uk.com/.