If you’re the new business director at an advertising agency, 2009 might not be the quiet year you perhaps dreaded. The Marketing Communication Consultants Association (MCCA) has announced the results of its Agency Barometer, a “state of the nation” analysis of agency predictions for the year ahead. One thing it reveals is a feeling among agencies that clients will present them with more new account opportunities to battle over than last year.
More than half of all MCCA member agencies predicted increased opportunity to pitch for new client business – 56.3% expect to see more pitches in 2009 than in 2008. However, this increased opportunity may not necessarily be all it seems. Liz Childerley, who sits on the MCCA board as the new business specialist, says: “It might be tempting to approach a ‘go for everything’ strategy for new business, particularly in light of predicted trading conditions, but beware the client that is looking to get the incumbent agency to sharpen their pencils or force a drop in fees.”
And, she adds, with money so tight and targets so tough in 2009, it will be worth remembering how much pitching costs an agency and the impact it can have on existing business. “Agencies should be more selective than ever in going through due diligence to qualify the opportunity and being honest as to whether or not the client is right for them and the future aspirations of the agency. Set your ‘new client’ criteria and don’t be tempted to stray.”
Digital and DM on the up
In terms of the disciplines that agencies are expecting to prosper and suffer in 2009, digital is expected to maintain its stronghold on client budgets – a convincing 56% of agencies expect digital spend to increase. Also, and in contrast to the IPA’s Bellwether report, which reported a 12% decline in DM spend in Q4 of 2008, agencies are expecting an increase in direct marketing activity.
Debbie Morrison, director of consultancy and best practice at ISBA and MCCA board member, says this fits with what she is hearing from clients: “There is definitely a leaning towards accountable, below-the-line activity in the current climate. Of all the briefs we receive from clients, there has been a sharp increase in demand for direct, digital and integrated. Whether clients are clear on exactly how they should be buying digital activity is another matter – and I think it’s up to agencies to make that clear if they want to capitalise on the changing market.”
Agencies also expected an increase in sales promotion and PR. Conversely, most agencies expected a decrease in spend on sponsorship, media and advertising. This echoes the latest Bellwether, which showed that these were among the hardest-hit disciplines in the latter part of 2008 with each down by more than 30%. Agencies were torn on experiential, with the status showing that nearly 30% expected to see an increase, the same amount expecting spend to stay the same and 22.9% expecting spend to drop.
A positive outlook
Despite expectations that client budgets will remain steady or decrease, agencies remain buoyant about their own businesses, with 31.3% actually expecting staff numbers to increase. Only 18.8% expect to lose staff this year.
Andrew Reeves, Ogilvy finance director and the MCCA’s financial specialist, comments: “The MCCA’s membership is made up of more nimble, flexible businesses that don’t carry the excess often associated with larger, more corporate structures. This means that they probably streamlined back at the end of 2008 or have appropriate staff numbers for the year ahead. The number of agencies looking to increase in 2009 is representative of the fact that client budgets are being allocated to more cost effective and responsive solutions in this current climate. The MCCA members are particularly well placed in this regard.”
On the whole agencies described themselves as “quite optimistic”, (66.7%), with 8.3% going as far as saying they were “very optimistic” for the year ahead. Just 2.1% of agencies described themselves as “very pessimistic”. Most recognised the impact of the economic unrest on client budgets, with only 16.7% expecting to see budgets increase in the next year.
Scott Knox, the MCCA’s managing director, concludes; “I think it’s clear that most agencies have adopted a positive approach to the turbulence ahead, and I applaud that. Being an excellent marketing communications consultant doesn’t mean that you can consult when the budgets are rocketing, but fall to pieces at the first sign of trouble. This recession will sort the wheat from the chaff, and agencies that can answer ever-greater client challenges will live to tell the tale.”
Marketing Week reporters