The talent crisis, of all things, could put an end to the pitch madness, Crossmedia Germany managing director Sebastian Schichtel says. In this article, he explains how this bold hypothesis came about and why the war for talents could actually improve the relationship between clients and agencies.
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About 15 years ago, I decided to turn my back on climatology (spoiler: it’s getting warmer!) and seek my professional fortune in the advertising industry. Ever since, two things have been my constant companions: consistent change and the agencies’ lamentations about pitching processes.
The latter almost appears to have become part of the industry’s folklore, even though pitches and the associated bidding processes have changed repeatedly over time. Not only for the better; though. This is because a perceptible professionalization on the part of advertisers and their consultants is offset by ever-increasing efforts on the part of agencies. Market research, RFIs, chemistry meetings, tool & tech sessions, workshops, RFPs, and negotiations regarding terms and contracts can only provide a partial picture of the enormous effort and costs that agencies have to shoulder as part of a normal pitch process. I don’t need to mention that this is usually done without any significant fee that could even remotely provide a fair reflection of the effort involved – despite the self-imposed code of conduct of organizations like OWM and OMG in Germany.
This could soon come to an end, however, because the talent crisis, of all things, is leading to an abrupt end to this pitch madness.
A transition from demand to a supplier market
Bold hypothesis? True, but there is also a kernel of truth behind this shameless clickbaiting that describes the effects of the current staff shortage on our market and customer-agency relations.
Today, as is the case with all other market participants, agencies are also struggling with scarce resources. As a result, the availability of talent is not only becoming a competitive factor. Increasingly, it is also becoming a limiting factor when it comes to business growth. With rising salary and overhead costs, agencies are forced to allocate their available resources in a strategically long-term and profit-maximizing manner. All of this is nothing new. Yet today, agencies have to consider more carefully than ever which pitches and clients they would like to deploy their resources for. As a result, we are noticing a paradigm shift: specifically, the shift from a demand market to a supplier market. Admittedly, this does not apply to all accounts in equal measure. Nevertheless, especially for smaller and medium-sized advertising budgets, this seems to me to be a valid reflection of the current state.
The first visible signs of this can already be observed in various pitches. Pitch consultants sometimes have a hard time filling the illustrious field of participants – and are sometimes not even able to do it at all. And also with regard to timing and process steps, the framework conditions are increasingly being specified by the agencies themselves. Yes, something has changed.
Yet what do these developments mean for the relationship between advertisers and agencies?
On the one hand, agencies will have to scrutinize their existing and prospective client relationships even more critically in the future. The days when agencies accepted jobs on almost any terms are likely to be a thing of the past for the time being – simply because they can no longer do so (staff shortages) or no longer want to. In terms of work-life balance, flexibility and fair overtime regulations, agencies have changed a lot, and hardly any agency is willing to risk its people suffer a burnout for a cutthroat job at dubious conditions.
Longer-term collaboration benefits business goals
On the other hand, the current development provides opportunities for more long-term and closer collaborations. Clients who have a functioning agency setup today should carefully examine whether a change would actually bring more opportunities than risks. Incidentally, this also applies to the agency side to an equal extent. In a best-case scenario, the development promotes more long-term customer-agency relationships, based on true partnership. And these have always been the breeding ground for open and integrative collaboration, which is indispensable for achieving sustainable business goals. In times where short-term tactics triumph over long-term strategy too often, and agency partners are used like tools to fulfill proxy CPIS, this may well provide a glimmer of hope.
The talent crisis will remain with us for a long time (not least because our baby boomers are gradually starting to lean back and put up their feet) and it will permanently change the relationship between agencies and advertisers. In light of the current pitch madness, this can really only be a positive development.
A similar version of this article was first published on Campaign US on September 13th, 2022.
Foto Credit: Izz R (Unsplash)