Ding dong, the pitch is dead

What’s wrong with pitching these days? Plenty, says Pete Martin, SMARTS’ Creative Director. And here, he explains why the classic ’speculative creative pitch’ is becoming unhelpful for both agencies and clients, and suggesst a simpler, more sensible way for communication partners to come together.

Creative pitches are the most exciting part of the business. Anyway, that’s what they told me when I first started working in the industry that used to be known simply as Advertising.

And it is true that, when the whole agency is hyped, burning the midnight oil in pursuit of one incredible idea that will blow the client’s mind, win the account and transform the fortunes of all involved… it can seem like fun.

You could even say I’ve managed to hold down a job in advertising for about 25 years precisely because I’ve been able to win more than my fair share of pitches.

Yet, something tells me that for clients the classic ‘creative pitch’ has become an outmoded, laborious process which often produces erratic results. But, for the agencies, it’s simply become uneconomic.

I recently gave a couple of talks to the Chartered Institute of Marketing on ‘how to run a professional pitch’. Frankly, if you are determined to run a ‘pitch’, there’s a proper way to do it and it’s described in our book ‘Life’s a Pitch.’ Email us if you want a copy.

However, just talking about the ‘classic pitch process’ made me wonder if it’s really applicable to the modern world. When 95% of the marketers present were too young to know what ‘the commission system’ was, it dawns upon you that the old agency business model of ‘high risk/high reward’ has been well and truly knocked on the head. You could even say that the ‘ad industry’ has let itself be lured into a blind alley by clients, given a good kicking, had its wallet snatched, and is now lying in a heap, slowly waking up from unconsciousness and wondering what happened.

Clients have got us pitching for the back of a postage stamp – with almost infinite demands and expectations laid out in tenders and pitch briefs, and next to no contractual obligation to remunerate the winners, never mind compensate the losers.

It’s a commercial dilemma for us. And an ethical quagmire for clients.

At my CiM seminar, one of the more senior people present put the client point of view something like this:

My responsibility is to my shareholders: to achieve the lowest costs and make the greatest profit. If agencies are dumb enough to give away their work for free, it’s my right and duty to exploit them for everything I can.

Yep, it’s not illegal to take free pitches from 3, 4, 8 or even 15 agencies for the promise of not necessarily much return for one firm, and no return at all for the rest. But then, in the Victorian era, pushing little boys up chimneys wasn’t illegal either, but would you condone such exploitation today?

I do believe that, as Corporate Citizens, every client organisation is obliged to ensure that the basis on which consultant agencies bid is commercially fair and economically productive.

In brief, that the proposed value of the business to be won must be (considerably) greater than the total combined cost of bidding to the agencies.

(Equally, clients must be clear and honest about what they are in the market for: Objectivity and Insight? Or someone to do what they are told? Fresh Ideas and Solutions? Or normative sector experience? Craft Skills and Technical Know-how? Or low budget, fast turn-round? Service and Production Capacity? Or someone to make you feel important? Or, in fact, does your score sheet contain a blend of all of these public and/or private criteria?)

In my experience, the chances of winning a pitch are broadly statistical. The general similarity of agency services and marketability, and the random preferences of clients, mean that if there are 4 agencies in a pitch process, you broadly win 1 in 4. When you’re on a roll, you might win 1 in 3 – then the agency grows fast since acquisition rapidly outruns churn.

(At the end of last year, I was on a bit of a roll, I won three pitches on the trot. I told the audience at the CiM that, statistically speaking, I would probably lose the next 9 pitches. And so far, that’s how it’s panning out: I’ve lost 3 in a row so far….)

Anyhoo - here’s the real question. Imagine you own an agency and a pitch is like the toss of a £1 coin - heads or tails - where you have a 50/50 chance of winning every time. In a long run of tosses, you’d win half and lose half.

Suppose, if you win you get the £1 coin, how much would you bet to win?

I put this question to a couple of friends of mine who fancy themselves as semi-pro gamblers.

One replied: “£1.� The other generously suggested: “£1.20 since the bookie needs a margin.� Which only goes to prove how nutty gamblers are.

Even with a £1 stake pitched, say, 100 times, you’d win £50 and lose £50. And – after all the effort, process and risking potentially £100 capital – you’d come out with nothing.

So, what’s the real answer? 70p, I think, if you work for a plc. (You pitch for £100 in income. You win £50. You lose £35. You make £15.) That’s a 15% return, which the City likes.

Silly, I know. But, even this simple example, shows how fraught the pitching game is for agencies. If you ran an agency, how much of your time and resources (ie money) would you gamble on, say, a 1 in 5 chance of winning an unspecified sum of money – where the winner takes all, but where the more you gamble, the more free work you do, the more chance you may have of winning?

It’s sort of mind-boggling - which is why agencies don’t like thinking about it, and go for broke even on small projects.

But it does highlight how inefficient, wasteful and unfair the ’system’ is. And how it disadvantages agencies’ current clients, eats up the agencies’ time, focus and energy, and unnecessarily inflates their costs. (Because who pays for every unsuccessful pitch? Other clients do.)

Yes, you say, but modern marketeers – especially in the public sector – use score cards to maintain objectivity to ensure the right agency wins.

Taking aside the question of whether anyone is ever dumb enough to add up a few numbers to get an answer they don’t like…

In factorial analysis, an econemitrician once told me, a model with 6 major factors can achieve 80% predictive accuracy. After that, there are massive diminishing returns in producing even minimal improvements in accuracy.

So, you’re a client with a score card…

And you factor in:

The location of the agency

The size of the agency

The service offer of the agency

Their robustness as a business

Their ‘reputation’

Your potential importance as a client

Their sector experience

The ‘chemistry’

Proposed costs

Their strategy

Your confidence in their delivery – and your confidence in your own ability to distinguish between promise, performance and reality, with people who are often charismatic and persuasive for a living….

Then, add in a creative presentation, and assume you have the expertise to differentiate between a slick visual or a spellbinding creative idea or something that may actually work in the real world…

And, since you are part of the mere 11% of the population who work in offices, you also realise that there’s an 89% chance you are not remotely representative of the target audience and that your own personal taste is almost certainly a highly unreliable compass to public reaction – paradoxically, even more so if you work in public service with its sensitivity to fringe pressures…

You may feel that the good old-fashioned full-blown creative pitch is perfect for you. Fill in your scorecard with a clear conscience.

But do not be surprised if you appoint an agency but feel a strange reluctance to run the pitch work. That’s been a truism since the previous mid-century: the pitch work won’t run.

So why is it still done?

Yes, it’s a kata competition. A simulacrum of the ability to fight.

But only that.

So what’s the alternative?

It’s easy. Go speak to a bunch of agencies. Not those you ‘fancy’, but those with a record of doing exactly the kind of thing you have in mind. (Why go for beauty queens, when you want some good old home-cooking done?) You’ll get a feel for those you can get along with personally, those you can trust.

Pick one (or two if you are weak-willed). Tell them honestly what your problems are. (If you haven’t got any, you don’t need an agency.) Work with them closely – on a paid basis – to solve your problem. Tell them whether you want something ‘in-sector’ or something iconoclastic. (I always find cheese-strength ratings a good analogy – from a bland 1 like Wensleydale, to a strong but mainstream 5 like mature cheddar or off-the-scale like blue Stilton…)

This way is efficient for you and the agency. It’s fair, and the agency can invest in your process. It’s also interactive and more fun, and you’re more likely to get an answer that fits your needs.

What could be easier? Certainly not the old-fashioned erratic pitch.

This entry was posted on Tuesday, October 16th, 2007 at 2:45 pm and is filed under Insights. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.