Back in May, PRWeek reported that Ackermann Public Relations had landed a new contract to handle PR for Dallas/Fort Worth Airport. It seemed worthy of note because it is a prestigious contract, and because, pleasingly, the airport's head of public affairs had encouraged minority-owned firms to bid, realizing that Hispanic and African-American audiences were vital to the airport's future.
But a skim-reader might have missed the most intriguing thing about this story. No, not the $480,000 promised to the agency, but rather that 19 shops bid for the RFP. Moreover, though this went unsaid at the time, a whopping 134 firms were sent that RFP.
If you were to watch 19 films, one after the other, in a matter of a few days, could you recall with any precision the content of each movie?
Wouldn't they blend into each other after a while? With all the special effects, cunning plots, and eye candy, it would still be a mind-numbing process, less likely to facilitate any kind of education or entertainment than watching four of those films more attentively. With due respect to the 19 firms that had to play show and tell, what are the chances that their presentations were more memorable than Hollywood's.
The Dallas Airport case is by no means a one-off either. One consumer marketing RFP doing the rounds in LA presently required nine agencies to pitch, and that was after the initial shortlist was narrowed to exclude firms with conflicting accounts. Financial software company Intuit recently asked 11 agencies to submit proposals. And the Canadian lumber industry - currently suffering due to a US not-very-fair trade tariff - this week issued an RFP to 17 firms to handle a public affairs effort in DC.
In addition to these mass beauty parades, agencies are also reporting an increasing amount of tire-kicking, whereby they are being asked to submit credentials and ideas for a particular project only to find that the work for which they were bidding is either scaled back or indefinitely postponed.
At the beginning of the year, many agencies were cautiously optimistic, citing a dramatic uplift in the number of RFPs as the reason for their change in mood. Certainly, it's better that there are RFPs out there than for the market to be as quiet as it was in the last quarter of 2001. In addition, we are taught to believe that competition is always good, and, in this case, the idea would be that highly-competitive tendering is forcing firms to focus harder on the ways they deliver ROI, and on honing their pitch skills.
However, a new study by Al Croft, the former corporate and agency PR pro who now publishes the Management Strategies newsletter, shows that the cost of winning new business has risen an average of 20% for agencies.
(Croft suspects that figure rockets to 50%-100% in the tech sector.) Although his respondents said that such costs could be offset by careful planning and cost control, the growing cost of pitching will inevitably have a detrimental effect on many firms' revenues, especially as the increased competition often means that the budget for the contract in question is being driven down.
Corporate PR pros often comment that the client service offered by agencies is not up to par, that many don't properly understand their business, and that most shops have too little experience in their ranks. There is certainly some truth in this, but driving down prices and asking a lot of agencies to jump through a lot of hoops will only make the situation worse as agencies cut costs and corners.