Ad agencies are moving to virtual pitches in the era of remote work, and it could cause more pain for the holding companies
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- Ad agencies have taken their new-business pitching virtual due to the coronavirus.
- Agencies and clients have adjusted to this new way of working, but remote meetings lack in-person chemistry.
- Because of this, some clients are delaying final decisions or just hiring agencies for small projects.
- But big agencies and holding companies rely on long-term contracts to maintain their overhead - and this shift could reshape the business over time.
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Ad agencies have ditched formal pitches for video ones in the race for new business as the coronavirus puts the world into lockdown mode. But this shift could encourage brands to avoid risk by focusing on more short-term contracts, furthering a trend that has already challenged the ad agency business model in recent years.
With video, agencies are taking a decidely more informal approach. Amanda Richman, US CEO of WPP media-buying agency Wavemaker, said she tells her employees to resist the temptation to "put on a show" in remote pitches.
Companies that had previously insisted on agencies adapting to their schedules have adopted "a much more collaborative, 'let us know if this time works'" tone, said Sam Lythgoe, global head of business development for WPP-owned PR firm Hill+Knowlton Strategies.
Chris Sojka, co-founder of Brooklyn's Madwell, told Business Insider that he hasn't seen a single CMO in a suit since his agency began pitching remotely.
This sweaters-and-jeans atmosphere, along with the tendency of children and pets to wander onto Zoom screens, can bring the parties involved in a pitch closer together.
"There's an inherent intimacy to presenting work from your own domicile or sanctuary," said Sojka.
The casual format presents its own challenges
Independent agency Imre assigns a "quarterback" to handle client questions on each pitch call so team members don't talk over one other, said head of business development Brian Simmons, and several executives said they've reduced the size of their pitch teams to avoid confusion.
Lythgoe said several people were obviously zoning out during one of H+K's recent video calls.
The biggest challenge of virtual pitching is an inability to "read the room" remotely - along with unexpected technical difficulties like spotty wifi or toddler tantrums.
Gina Gray, director of business development at Minneapolis agency Colle McVoy, said the pandemic has expedited the review process by eliminating in-person meetings, but virtual sessions can't replace the chemistry that comes from being face to face.
Sojka said one big prospective client punted on its final decision because executives weren't comfortable signing a contract without meeting Madwell's leadership in person.
Virtual pitches have led to more project work
Perhaps most important, Sojka said the pandemic has sped up a years-long trend in which brands hire agencies for project work rather than long-term contracts.
"I see an acceleration of people asking for project exercises, and particularly small ones," he said, noting that his agency has declined some offers that wouldn't have made sense financially.
Some brands see this as a less risky and expensive way to get to know agencies in the new remote era. And it might work for independent operations with flexible budgets - but not the big holding companies that rely on multi-year agency of record contracts to keep the lights on.
The search for new revenue has continued in spite of speed bumps
Despite the economic slowdown, brands have to continue advertising their products. And agencies - along with holding companies that answer to investors every quarter - have little choice but to try and win as much new business as possible.
"It's remarkable how many pitches continue unabated and unchanged in this new reality we're all living through," said Shane Ankeney, president of Havas Media North America.
Colle McVoy, which is part of holding company MDC Partners, has already completed six virtual pitches and one capabilities meeting in the four weeks since it transitioned to remote work, Gray said.
Other pitches have been interrupted.
Imre's Simmons said his agency was less affected than some because 50% of its clients are in the more heavily regulated pharma industry, which has longer and more deliberate reviews. But he said the new business pipeline has slowed down after a two-week pause that took hold as the situation grew serious in mid-March.
And Gray said one big brand paused its entire review indefinitely due to supply chain issues in China, where the coronavirus originated.
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