Industry bodies partner with OUCH! Factor Survey to shed light on hidden cost of pitching

March 1 2022, 9:49 am | BY Ricki Green | No Comments
Industry bodies partner with OUCH! Factor Survey to shed light on hidden cost of pitching

The OUCH! Factor Survey is open for submissions, calling on Australian agency leaders and marketers to share their pitching experience with a mission to calculate the hidden cost of pitching for both sides of the process.

 

The 2022 OUCH! Factor Survey is currently open and closes on Thursday 31 March: https://survey.websurveycreator.com/dandmresearch/OuchFactorNBM2022

Conducted by New Business Methodology, growth consultancy to Australia’s advertising and marketing industry, the survey is this year backed by Advertising Council Australia (ACA), Australian Association of National Advertisers (AANA), Media Federation of Australia (MFA) and the Independent Media Agencies of Australia (IMAA), which are inviting their members to participate.

The inaugural OUCH! Factor Survey in 2021 surveyed 91 CEOs, MDs and leaders from creative, media, digital, PR, and integrated agencies, and 26 CMOs and procurement leads.

It found that the average agency spent 175 hours on each pitch, and a cumulative 1,913 hours a year pitching – investing the equivalent of $100,000 in unbilled hours before winning a single pitch. Marketers and procurement invested 125 hours on the average pitch process.

The data investigates the difference between independent agencies and holding companies, agency size and agency discipline (creative, media, PR & comms, digital, full-service, and consultancy/strategy).

By analysing the opportunity cost associated with pitching, looking at what the time invested in pitching would equate to if it were to be spent on billable activities, The OUCH! Factor Report in 2021 found that it took the average agency 14 months to reach profitability on clients won in a pitch. For some agency disciplines, this rose as high as 39 months.

Says Julia Vargiu (pictured above), founder and managing director of New Business Methodology,: “The OUCH! Factor Survey seeks to help agencies and marketers better understand the hidden cost of pitching in terms of time, hard cash, and blood sweat and tears. Agency leaders and marketers were shocked to see the results of last year’s survey, which painted an unforgiving picture of how much time agencies really invest in winning new business through pitching, and how long it will take them to recoup the opportunity cost of that investment in the equivalent billed hours. Not to mention the time it will take for that client to become profitable.

“We’re excited to be partnering with the industry associations for this year’s survey and hope to build on last year’s results with a more comprehensive look at the state of pitching in Australia. We invite agencies of any discipline and clients of all sizes to take The OUCH! Factor Survey today.”

Says Tony Hale, CEO, Advertising Council of Australia : “The industry is buoyant and we are very optimistic about the future role for creativity as we emerge from COVID. Workloads are already heavy however, and we need to prioritise our people. Pitching is important for agencies but it is often not fit for purpose. In order to address the inefficiencies that all parties bear, we must quantify the cost and impact of pitching. We are delighted to collaborate with The OUCH! Factor Survey so we can understand this issue from a whole-of-industry perspective.”

Says Sophie Madden, CEO, MFA: “In recent years, scrutiny of the pitch process has increased as both advertisers and agencies identify flaws in certain aspects of the process. The MFA sought to provide guidance in this area through the launch last year of the Successful Agency Pitching Guide, in partnership with the AANA, and we are pleased to be participating in The OUCH! Factor Survey to help shed further light on this important industry issue.”

Says Julie Flynn, CEO, AANA: “Pitching is a necessary part of our industry and this survey is a valuable opportunity for marketers to share their experience of the process, leading to a better understanding of each side’s perspective and ultimately improving outcomes for all involved.”

Says Sam Buchanan, general manager, IMAA: “IMAA members are delighted to participate in this important national survey and to elevate the conversation around how we can improve the pitching process.”

The 2022 OUCH! Factor Survey is currently open and closes on Thursday 31 March: https://survey.websurveycreator.com/dandmresearch/OuchFactorNBM2022

 You can download the 2021 OUCH! Factor Report at: https://www.newbusiness.com.au/ouch-factor-report-2021/

 Register to receive a copy of the 2022 OUCH! Factor Report when it’s ready: https://survey.websurveycreator.com/dandmresearch/ouchfactor22report

New Business Methodology is a growth consultancy specialising in helping Australian agencies to master new business to transform their growth strategy and get fit for scale.

 HIGHLIGHTS FROM THE 2021 OUCH! FACTOR REPORT

  • Respondents represented 117 Australian agencies and marketers—primarily agency owners (47%) and agency CEOs/MDs (32%), but also new business directors, client service directors, client-side CMOs and procurement.
  • Of the agency respondents, 81% were independents and 19% owned agencies.
  • The average Australian agency:
    – pitched 11 times a year and won 5 of those pitches (for a 48% win-rate);
    – spent 175 hours on each pitch, and a cumulative 1,913 hours a year pitching;
    – invested the equivalent of $100,000 in unbilled hours before winning a single pitch
  • The most pitches entered by one agency in 12 months was 65 (or 4.5 pitches per month).
  • Survey respondents from independent agencies reported greater pitching success than their owned counterparts (49% vs. 40% win-rates, on average).
  • Agencies with a headcount of 20-29 outperformed agencies of all other sizes, with a 67% win-rate. The next best performers were agencies with a 70-99 headcount followed by 100-149 headcount (52% and 54%, respectively).
  • Across disciplines, agencies with 70-99 headcount spent an average of 5,300+ hours a year on pitching — more than their smaller and larger peers.
  • Full-service agencies entered the greatest number of pitches on average (15), with the second-highest win-rate (56%) and highest pitch revenue value won (67%).
  • On average, full-service agencies invested “significantly more human resource” in pitching compared to other types of agencies (3,300+ hours a year per agency). The next closest category of agency (media agencies) spent far less at 2,300+ hours per year.
  • Creative agencies suffered one of the lowest revenue win-rates at 35%, meaning they would have to work 21 months to see profitability on their new client wins.
  • PR & comms agencies would have to shave 40% off their win-revenue to recoup the equivalent in billed hours that they’d spent pitching (versus the “agency average” of 17%).
  • When looking at time to profitability after winning a client, some agency types (like PR & comms) face a recovery time of 2.7 years, making it unlikely for them to break even before the relationship ends (considering an average agency-client relationship of 2-4 years).