New-business wins are often the only clear metric for judging how well an agency is performing.
Each agency is built differently, so to place different diversity initiatives, sustainability credentials and employee satisfaction against each other isn’t always effective.
It makes sense, then, that league tables (like those from Nielsen Ad Intel and from R3 Worldwide) and business wins have been used in the same way that radio stations use listening figures and TV channels use viewing figures.
At Campaign, we write extensively about new business and our School Reports are a staple feature of our yearly editorial content, with business wins being a large factor in deciding how well a company has done.
But with the new-business market slowing down, it may be time to stop considering new wins as a measure of how well an agency is actually doing.
Growing clients, rather than client base
“The single most important thing for any agency is client work and new business must never get in the way of that,” Jamie Wynne-Morgan, chief executive of M&C Saatchi Sport and Entertainment, says. “It should be managed, and I don’t believe it’s growth at all costs.”
His agency had a recent big win with Barclays, which meant that it de-prioritised new business in Q1 and is only now starting to turn its attention to pitches in Q3, with five currently live.
Wynne-Morgan does acknowledge that, as part of M&C Saatchi, his agency sits outside league tables, which he thinks alleviates the pressure to win new business.
He refers to the organic growth of clients as an example of something that isn’t accounted for enough in the judgment of an agency.
“Revenue growth comes from new-business wins, but also organic growth. Fundamentally, an agency is as strong as the clients and the work that they do.
“Are you doing groundbreaking work? Are you doing work that is making a difference? Are you doing work that is helping your clients grow? That's really what agencies should be judged on, not a new-business table.”
Which is what awards are for, surely? But awards are frequently a reflection of what the industry, rather than the public, thinks of a campaign.
Pippa Glucklich, chief executive of Electric Glue, echoes Wynne-Morgan sentiments, adding: “New business is vital, it’s the lifeblood of an agency but I think it has a disproportionate importance in our industry.
In part, it’s because we’re a fiercely competitive bunch and we love to win. But also it’s down to short-term thinking, which, in my view, is not healthy and comes at a price.”
Glucklich says that the industry would benefit from focusing on the long term. For instance, looking at markers such as B Corp status, recently attained by Electric Glue, which demonstrates a long-term commitment to ethical business practices and sustainability.
For Campaign's School Reports, she suggests they should include a score for sustainable business practices and long-term client retention, as well as looking at the growth of organic media spend by a client.
So perhaps the best metric for an agency would be to look at how much an agency grows a brand and its long-term practices.
Not all wins are created equal
Many would agree that the pitching process is broken, the eagerness to win new business stretching teams beyond their limits and undercutting becoming a prevalent issue.
However, after pitching is over, issues sparked by the process are set in motion and continue to gain momentum.
Glucklich adds that during the pitch process, the client will see the “A” team, and once the business has been awarded, on a day-to-day basis the clients will see the “B” or “C” teams, who are, typically, more junior.
“This model means agencies are very often stretched in terms of their ability to deliver on pitch promises.”
Andrew Stephens, co-founder of Goodstuff, says that many agencies pitch for a client with a “good proportion of the required team” not yet hired.
Still, he adds that he had “only recently” come around to the idea that too much focus is placed on new business, and agrees with Glucklich that a better measure is client retention.
He also adds that not all wins are created equal: “How much credit, for example, do you give an agency for winning new business if the media rates put forward are unbuyable and the commercial terms unprofitable?
“Or a win where the client was only ever going to appoint that agency? They are both wins, but not great wins.”
Growth at what cost?
The conclusion seems to be that a better measure of an agency is client retention over client wins.
However, as the climate crisis rages on, the question is should brands be allowed to grow?
Economic growth is not yet decoupled from environmental impact. Growth and increased consumption leads to more non-renewable sources, higher levels of pollution and the potential loss of environmental habitats.
Ben Essen, global chief strategy officer at Iris and one of Campaign’s 2021 “Trailblazers” for Iris’ initiative against climate change, says: “We should be very wary of the need to chase new business for purely commercial reasons.”
As a contributor to the Purpose Disruptors group, Essen co-authored a report with Dr Grace Kite and Jonathan Wise, Advertised Emissions, on the impact of campaigns in the transition to net zero.
The group is also working on a “red”, “amber”, and “green” framework to help agencies assess the impact of their client portfolio.
“It's fine for agencies to grow their roster of ‘green’, sustainable clients, but they need to be replacing the ‘red', high-carbon brands, like fossil fuel brands, and actively working to transition any 'amber' brands like car clients,” Essen says.
Ultimately, wins are to be celebrated, but the industry needs to take a long, hard look at the type of clients they are celebrating and assess whether client wins are the key to measuring success.