Is now the time to fix the RFP process? Historically ad agencies have always done their level best to scratch each others’ eyes out as they give away the farm competing for a new account. In this tough economy it’s only getting worse.
I and so many others have written about this subject over the years. The AAAA’s tried some time back to entrench a set of best practices that no one paid any attention to. The whole process remains a free for all where anything goes and in the current economy the larger agencies are even fighting over scraps they would not even have sniffed at two years ago.
Hundreds of thousands of dollars of work continue to be given away for free by agencies while clients continue to pay only for the chosen agency’s work and then leverage the euphoria of the win to negotiate a bottom dollar compensation agreement with the agency. The agency costs incurred during the pitch are most often ignored resulting in the agency having to dig itself out of a financial whole at the outset of the relationship.
For those agencies that did not prevail, the pitch becomes just another “investment” that adds to their overall new business strain and has to be funded by either existing clients, reduced agency profitability or a combination of the two. If agencies on average have a success rate of 3/10, that leaves seven lost pitches that have to be funded. It’s an unsustainable model.
Joseph Jaffe, Chief Interrupter at Crayon, recently wrote an article for Adweek entitled “No More RFP’s”. In his article he lists what he calls “10 points or calls to action…Arguably even calls to arms”.