That tortured squeal you've been hearing for the last two quarters is the sound of PR agencies – along with their other marketing brethren – being squeezed to cut fees or renegotiate terms by their clients. The exhale that is now audible is the sound of that process finally drawing to a close, at least for some. No one dares infer from this gradual stabilization that another round will never come, but it is a moment of at least temporary respite.
Unfortunately, another trend of the bad old days is back. More than a few pitches are turning into agency cattle calls, where up to 15 or more firms square off in competitions of many rounds, costing a great deal of money and creating a huge amount of aggravation. Anecdotal evidence across a range of agency types and sizes suggests these mega-reviews are on the rise again, no doubt in response to recessionary budget pressures.
The economies of conducting a review of this kind are somewhat unclear, even taking into account the negotiation potential. Time is money, after all, and wading through more than a dozen proposals, as well as live pitches is daunting for the lean and mean PR departments of 2009. While procurement is often implicated as the review architect, it can't solely be responsible for this resurgence.
On the client side, one might presume that competition brings out the best ideas, and a broader cross section of the agency universe will offer even more great concepts, at basically no cost to the company. It's likely true that some clients are able to command agencies that were previously conflicted out of their business, or would simply have passed on a piece of business that was too small.
Yet cost control is clearly a primary motivation, and one that's tough to challenge in difficult times. But there are important reasons not to turn agency reviews into cattle calls. Eventually, the most stable and consistent firms will turn down these pitches, leaving clients with only those firms most desperate for the business eager to take part.
Pitches cost agencies money, sometimes big money, and also exhaust the goodwill and creativity of already over-stretched teams. Firms will ultimately loathe putting their stars, and their money, into what might turn into fruitless chases for negligible business.
Client/agency partnerships that emerge from these protracted reviews will have to work hard to overcome the strain of the process, and that's the biggest risk of all for companies looking for greater value from the relationship.
Julia Hood is publishing director at PRWeek