The bit in the pitch process that gets overlooked…..the cost
A valuable piece of research and guidance from the IPA and the ISBA has drawn together a set of principals that agencies and brands can apply when they are entering the pitch process.
The Good Pitch is a microsite that explores these issues in detail. All the usual clichés about beauty parades and chemistry sessions are condensed into a commonsense approach, and six principals are presented.
BUT, what about the cost? The IPA and the ISBA previously looked into the real costs of pitching, and their research identified the alarming disparity between the estimated investment from the Agency side compared with the actual cost (in days expended by senior people).
Most Brand Owners consider the average investment for a top tier (£15m +) agency in a pitch is £31k. The reality according to the same research can be as much as £178k
How? A simple calculation of the actual hourly costs of executives multiplied by the working hours gets much closer to the real liability that the agency incurs.
So how can an agency reconcile the huge variation between the real cost and the perceived estimate that the brand owner attributes to the pitch? Do they really care- after all, if you are competing for the business you have to accept that the effort is going to be speculative. The pitches you win compensate for the ones you lose.
Arguably the ‘loss’ of income is relative, because the headcount would be covered within the business anyway (whether the team is billable or pro bono). But the point is to be in a position to measure the effect of absorbing pitch costs, and forecast the outcome of future pitches and the effect these could have on your bottom line.
Whilst the timing of new business is almost impossible to predict it is surely reassuring to know what the impact on your resources would be of winning or losing these projects.
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