1. Agency Structure, Search and Selection 2012
Pitching for a better outcome:
The Pac-Man Partnership
Life’s a pitch. And the pitch needs reinventing.
Morten Pedersen, GLUE2020, takes a view on how advertisers can make best use of the agency pitch
process, to deliver a much more business relevant outcome.
Part of the challenge in any client-agency pitch process, and that conversations pursuit of their client’s success in the
relationship undoubtedly lies in building about building market-share are replaced marketplace.
greater trust between the two parties. But by short-term savings targets? Is it Quite apart from the damage it does to
to do so, clients need to help raise the possible that the pitch outcome is transparency, this tendency diverts
standards and create a pitch framework determined even before invitations are agencies’ effort away from what should be
where agencies not only commit to saving issued to agencies? the ultimate real goal, which should be for
an amount of money, but instead compete advertising budgets to deliver increased
on which strategy will deliver the greatest Are Agencies asked to deliver on the revenue and profitability for their brands
possible impact on sales and revenue. In wrong KPIs? and products.
other words, it is time to reinvent the We asked ourselves these questions However, with ever shorter agency
pitch process from being a quick-fix “Race because we have seen many global tenures at the horizon, it is no wonder
to the Bottom”, to become an outcome advertisers fall short when it comes to they don’t want to commit to delivering
focused “Race to the Top”. looking at a bigger picture. In our daily certain revenue targets, and share
work, we see countless high-profile risks/rewards.
Surviving the recession advertisers force agencies into a relentless
For most international advertisers, the downwards spiral of cost-cutting. We see Fragmentation doesn’t help
recession meant that their agency many agencies bring immediate benefits And it gets worse when agency services
relationships shifted focus to a cost- to the advertiser, but as the relationship are fragmented and pitching for
containment strategy, with a little added goes on, the incremental gain evaporates advertising accounts is forced into
taste of never-ending budget cuts and and clients struggle to get back to discipline-specific ‘silos’ (separate creative,
unfavorable payment terms. And with historically acceptable service levels (at media, digital, search, PR, promotions…).
Procurement delivering on these terms reasonable costs). The trend of un-coupling services may
(and in a language Senior Executives can work well for tactical or operational
understand), agencies are finding The role of Procurement purposes, but it will never motivate any
themselves stuck in a downward cost- There is no doubt that Procurement as a single supplier to see themselves as a
cutting spiral. Translating that into discipline has become immensely more prime mover in determining the growth
marketing reality: Lots of procurement- sophisticated in recent years, but a cost- and value of their clients’ business.
run pitches. control mentality still prevails: “What
does the company need to buy - we’ll get So does your current pitch process
The stakes are getting bigger you a really good price on that” is how deliver real business partners?
When looking at what’s at stake at Procurement predominantly sees their If the honest answer is “not really”, or “not
pitches, no-one close to the global agency role at the company. And with quite”, or “frankly it’s a master-slave
scene can be in doubt that the numbers Procurement’s growing influence, it’s no thing” then the relationship risks being
are getting bigger and bigger. Giants like surprise that agencies feel trapped. one between ‘frenemies’. In which case,
Unilever, P&G, J&J, SC Johnson, Reckitt On the upside, cost reduction may be the pitching the business under different and
Benckiser, and more lately GM have all best way-station on the road to brand more business-relevant terms should be
engaged in multi-billion $ agency reviews, success (it may help control the the first step towards resolving this
with the key objective of driving down immediate cost of the journey). Yet, problem once and for all.
overall costs on a regional or global scale. Procurement seems largely unable to But to change the game, corporations
An example epitomizing this trend is build sound and sustainable relationships need to adjust and embrace a completely
when GM’s ex-CMO Joel Ewanick between clients and agencies. different set of pitch objective. No longer
happily shared that GM’s cunningly can the brief to Procurement be: ”Go buy
masterminded Chevy agency review Agencies play a low-risk, low-reward this piece of service at the lowest possible
would save over $2Bn savings for their game cost”. Instead, Procurement needs to learn
struggling brand. When it comes to the agency side of to engage in a much more collaborative
Thinking back over how multi-billion things: the current system forces them to and encompassing process, where they
agency reviews are traditionally handled, make their profit within the confines of single-mindedly focus on delivering on the
we keep asking ourselves if it is possible ever smaller fees and ever more bigger questions, such as:.
that those smart Procurement folks are restrictive terms. Human nature being - “What can this agency group do for
asking for the wrong things negotiating what it is, that pressure motivates them us?”
with their potential agency “partners”? Is to investigate ways of making money that - “Can they move our business forward
it possible that short-termism stifles the may depart from the single-minded on all fronts?”
1

2. Agency Structure, Search and Selection 2012
- “Are we/agencies willing to invest joint commitment of client and agency to Under this new era, econometrics can no
time, effort and money into creating commonly held goals. The one-stop- longer be an “optional extra” or a
and delivering unprecedented positive shopping, full-service contract is due for a discretionary add-on.
change?” major comeback, reversing a 30-year
trend towards fragmented advertiser Workshops and chemistry meetings
The role of Executive Management contracts with discipline-specific specialist All targets, strategies and expectations
To make this work, Client Management agencies. need to be set out and agreed in principle
should really look to their Procurement Increasingly, these specialties are offered in a series of workshops (often 6-8 are
and Marketing colleagues, and brief them side-by-side by the big agency groups, required), covering all aspects of the
to build new and accountable agency whose proudest boast is that they can “do potential relationship plus a maximum
partnership models, that pro-actively it all” through their network of offices, “what if” scenarios. It is critical that both
reframe and deliver on business purposes. subsidiaries and specialist supply-points. the client and the agency teams are
Putting it differently, senior management Accordingly, if all parts are once again to exhaustively prepared for these meetings,
should demand from Procurement that become components of a full-service and both parties are (including
they deliver agency solutions that benefit whole, agencies need to believe that procurement) are realistic about the
the company on strategic, tactical and clients really mean it. amount of information, work and time
operational level (today, agency supplier Though any sensible agency would favor that this will take. In particular, we see
relationships are considered purely the idea of higher income through jointly the following being indispensable:
operational, and they can be changed achieved results, their first reaction is • Research, consumer insight have been
irrespective of how the company likely to be: “So where’s the catch?” The disadvantaged in agency
performs). In a sense, the pitch process truthful answer to that has to be: “There organizations, as costs and service fees
needs to allow that agency to help the is no catch”. But to work, the process will have been squeezed. They need to be
client sell before they can save. require not less accountability but more – restored to their rightful place as
from both agency and client. Brand indispensable disciplines in defining
Enter Pac-Man owners will need to be trusting enough to strategies and determining outcomes.
In the classic model, client A uses agency embrace a collaborative working culture • Brand KPIs (the list of Key
B to chase objective C. based on full disclosure and shared goals. Performance Indicators by which
For their part, agencies will need to progress is monitored) need a
transcend the narrow and limited comprehensive overhaul and upgrade.
performance benchmarks they work to, Demote indicators that are only minor
abandon all hidden agendas, and embrace contributors to the outcome. Promote
the bigger picture of meeting business indicators that stand in a causal
objectives. relationship to outcomes, such as
consumer cost-per-acquisition or cost-
Mapping the labyrinth per convert (or similar if the brand is
To extend the Pac-Man analogy, this seeking to expand existing users
means mapping the labyrinth, plotting rather than recruit new ones).
The agency’s focus needs to be the same the path of opportunity, and pre- • Measurement is indispensable - but
as the client’s, however the objectives identifying any hidden enemies, lurking mastery of data is not enough. It’s the
have been defined. Like what? Brand monsters and traps for the unwary that ability to analyze, synthesize, pinpoint
trial, penetration, conversion? Sales, may be strewn in the brand’s path. key learnings, and convert them into
market share, return on communication real-time actions that can affect
investment? Probably all of the above. outcomes. The brand has to be able to
Once the pitch is over, and the knot has determine with reasonable certainty
been tied, there should be no further which bits of the investment are
argument between client and agency over producing what portions of the end-
compensation or reward. The reward for result, and assess each one’s cost-
the one is the reward for the other, as the benefit ratio.
brand, like Pac-Man, uses both mandibles
to swallow up the trail of crumbs.
A new beginning = new rules
The graphic makes it look easy, yet all
parties involved in the pitch would have to
fundamentally re-think what they are To put it less whimsically, the agency-
doing and why. Agencies and clients will client relationship has to be anchored in a
need to buy wholeheartedly into an working framework, based on
entirely new type of business-driven comprehensive and unbiased unified
relationship, collaboration and process, performance metrics (covering strategic,
based on sharing a long-term, exclusive, tactical and operational deliverables).
outcome-driven commercial arrangement. In addition, econometrics would be an Fully comprehensive NDAs and rules of
Gone are the days when the agency could indispensable way of mapping a picture of engagement, covering agency front and
sit on the fence, complaining behind your today and finding the brand’s pathway to back office, will need to be prepared and
back about low fees, lack of access to data, tomorrow. signed by both the client and the pitching
and limited access to decision makers. Throughout the agency selection process, agencies prior to any sharing of
much greater attention and effort needs to information.
Reinventing the full-service pitch go into fully integrated, (pre-) agreed The outcome of the various workshops
Implicit in this startling thought is that econometric-based framework, which and chemistry meetings will be an all-
now is the moment that advertising needs support decision making and performance encompassing framework, on which all
to move back towards the original concept measurement throughout the aspects of the new relationship will be
of the full-service agency, the long-term relationship. based and measured.
2

3. Agency Structure, Search and Selection 2012
Timing, too, is important administration, to the benefit of all Let’s close with some advice
Finding the right agency group and concerned. • Supervise the pitch from the highest
forging the right relationship will take 4. Identify the candidate agency level (one or more board-level
time. But the digitalization of our lives, groups that can meet client criteria executive sponsors are needed).
and the rising consumer expectations it on disciplines, geography and • Empower the agency not only to act
has occasioned, have speeded up sales avoidance of problematic account on the brand’s behalf, but to think on
cycles in an important and irreversible conflicts. the brand’s behalf.
way. 5. Brief shortlisted agency holding • Ensure the motivation for
In many sectors (consumer electronics to groups and conduct separate Procurement is to “think bigger”,
name only one) there is an increasing workshops with them, carefully rather than just “thinking savings”.
requirement for speed of reaction. Sales monitoring each one’s response and • Set out the rules of engagement from
progress has to be measured in real time, commitment to the “outcome- the very first contact with potential
and attributed accurately to the element focused” brief. Whilst these agency partners (i.e. a revolutionary
of the selling effort that actually caused it. workshops should result in the type of client-agency relationship).
After-the-event checks on an agency’s progressive modification of the • Only speak to the top of the agency
service costs, buying efficiency and framework itself, either agency world (and there are only 5-6 groups),
obedience may still be necessary, but none should contribute significantly and and get to 2 contenders asap.
of these things in itself determines the as such, identify itself as a potential • Test and learn – a single brand may
outcome in the marketplace. partner. be a perfect test run before rolling out
6. Define budgets, to which agency will broader.
Both client and agency need to be be required to commit in developing • Debrief both winners and losers.
getting it right from early on their outcome-focused • Prepare to work harder during the
It’s a dangerous world out there, with commitments. Favor “working interim pitch period – your existing
brands facing perils as well as money” over “non-working” agencies may feel more/less motivated
opportunities. When things go wrong, expenditure such as fees and (external pitch support can help save
they need to be acknowledged fast, commissions. many headaches, time and money).
accurately and dispassionately. Diagnose 7. Define metrics, responsibilities, • There is no shame in getting external
the problem, and turn it around fast, timelines and reporting lines. support, even behind-the-scenes.
correcting course by mutual consent. Act 8. Collaborate with the pitching
exactly the same when things go right: agencies to make joint provisions for Concluding thoughts
why did that work? And how can we do eventualities such as economic Re-thinking the pitch process to this
more of it? If part of the agency supply shifts and changing competitive radical degree will require courage,
chain (or indeed the client) looks like environment. This will avoid knee- imagination and goodwill from both sides
dropping the ball on one key issue or jerk budget changes and other of the client-agency divide. The reward for
discipline, there has to be a commitment strategic changes that could both is that the divide itself can and
to correcting the problem in real time, endanger the agreed framework. should disappear.
before the overall outcome is imperiled. 9. Establish a continuous program of
periodic reality-checks, progress
monitoring and course corrections.
10. Once all that has been discussed
and established, your choice of
agency group should be clear, and
commercial negotiations should be
engaged.
It will be a brave and determined client Let’s close with a quote from the movie
How is all this to be achieved in that signs on for such a do-list in one go ‘Inception’. In a dream-state, the Joseph
practical terms? across all their businesses, and multi- Gordon Levitt character is picking off
Whilst a pitch consultant can certainly sector clients may choose to adopt this rooftop snipers with a rifle. A comrade
help (not least in coordinating the various new approach by putting one of their appears beside him and blows the
strands that need to be tied together), this brands or businesses out to pitch (and enemy’s entire roof off with a massive
should by no means be a requirement if then roll out the approach to their other rocket-grenade launcher, with the smiling
the Procurement team is capable of businesses over time). throw-away line "You mustn't be afraid of
achieving alignment and driving the dreaming a little bigger”.
process. To make the process work, we’d The benefits
suggest a procedure along the following Handled right, however, the rewards of a Dream on, Pac-Man.
lines: successful agency pitch could deliver
1. Set up the senior in-house pitch task massive commitment from both
force (and nominate a pitch advertisers and agencies alike. To give About GLUE2020
consultant if needed). some perspective of the numbers in play, GLUE2020 is a leading-edge consultancy
2. Create the desired framework and one only needs to look at GM’s Q2’12 net that enables corporations and brand
define the brief, working open- revenue of $36.7Bn. And with appropriate owners create, quantify and capture value
endedly to define the best desired performance metrics linking (certain from marketing and media investments.
outcomes and priorities. parts of) company revenue, even the Entrepreneurial, we defy the old
3. Define all the communications minimum improvement above and consulting guard by offering innovative
disciplines encompassed by the beyond industry average growth, would services that design enterprises and
framework. Consolidating and represents very significant value to all agency relationships of the future. We
streamlining the vendor roster parties involved. help Fortune-500 companies exploit the
means getting more work from ever-changing consumer landscape, the
fewer suppliers, bringing economies latest technological developments, and
of scale, tighter focus and easier pioneering agency remuneration models.
3