Despite an apparently healthy level of advertising expenditure growth, latest reports from Spain suggest that some of the country’s advertising agencies are struggling to generate proportionately high revenue increases. The advertising market as a whole grew by some 5.6 per cent in 1997 while agency income was up by only two to three per cent on average.
Speaking to newspaper Cinco Dias, Paco Gonzalez, the newly appointed President of the Spanish advertising agency association, AEAP, has identified a number of factors which, he believes, have combined to hinder agency performance.
One of his primary concerns is pitch practice. Gonzalez argues that the Spanish advertising industry is going through a period of excessive emphasis on pitches. Pitch lists are becoming longer and pitches held more frequently. As a result, agencies are spending an increasing amount of time on preparing speculative presentations – time which would be better directed towards servicing their existing clients’ business.
Gonzalez also points out that the overuse of pitches risks turning the process into little more than a lottery, with the advertiser opting for one agency out of many often on an almost random basis. The final decision, in this costly and time consuming process, may ultimately rest upon a superficial point.
In dealing with the problem, the Spanish advertising industry is facing an issue that has threatened the development of successful part nerships between agencies and advertisers in other European markets. France, the UK and Germany have all faced similar problems.
Encouragingly, the industry bodies of all of these countries found ways to overcome the problem. By working together they have succeeded in reducing the incidence of unnecessary pitches and cut the number of agencies invited to participate.
One notable approach was that of France’s Le Club de Directeurs Artistiques, which in 1996 published a 15-point guide to help agencies forge stronger relationships with their clients.
They noted that unnecessary pitches, where the business often remained at the incumbent agency, were leading to accusations that some advertisers were trying to scare their agencies into becoming more productive. The fact that such claims were being made reflected a malaise within the industry which was damaging to all parties involved.
Many of the more successful advertisers recognise that advertising wealth comes out of building a strong and durable relationship with an agency over a long period of time. With an increasing number of advertisers working with fewer agency networks on a regional or international basis, the need for strong and enduring relationships is paramount.
By working closely with advertisers to address this issue at an early stage, Spain’s agencies will avoid problems which if left unchecked can destroy one of the building blocks of brands.