Recent research conducted by the PM Society revealed that 61% of agencies spend over £15,000 in internal agency time for a £200,000 pitch, and 41% spend over £25,000 per pitch.
In addition, while most agencies spend less than £5,000 in out of pocket expenses for a pitch, 28% spend between £5,000 and £25,000 (conducting research, producing creative material for the pitch).
When asked what was the most agencies had spent on a single pitch, the figures ranged from £28,000 to £85,000, with an average of £43,500.
These figures are in sharp contrast with the amounts that clients think agencies spend, with 39% believing the average total spend is under £5,000. Only 30% of clients thought the spend was over £15,000.
So, the conclusion is that agencies are spending quite a bit more on pitching than clients think. Why does this matter you might ask?
The majority of the clients that responded to the survey stated that there was a budget threshold within their company over which a competitive pitch must be held. The figure quoted for this threshold varied but was in the region of £55,000 to £85,000. So for a relatively small project, clients are being led into running costly pitching processes; costly for both sides.
It’s perfectly possible, therefore, that agencies, unaware of the size of the prize, are investing a disproportionate amount in pitching, given the eventual budget. Bear in mind that even a successful agency might win only 1 in 3 pitches so investing £15-20,000 on a pitch that’s worth under £100,000 doesn’t really make sense.
If a client can provide some transparency on eventual budget level, there is a clear benefit to the agency as they can scale the pitch costs up or down and cut their cloth accordingly (or choose not to take part). In so doing the client can show they understand the nature of pitch investment and send a signal to the agencies that they’re looking for a partner rather than just a supplier. As a result, they’re more likely to get a very motivated set of agencies taking part.
- Bear in mind that agencies may spend a significant sum of money on your pitch.
- Give the agencies some indication of the eventual budget so they can scale the amount they invest accordingly.
Authors: Paul Phillips and Michael Orriss