Feature: UK Agency Business Remains Subdued
The weakened economic conditions and the war in Iraq have caused the new business market to remain somewhat subdued over the last few months. The latest survey of account activity compiled by the AAR using MediaTel Group’s NewBizMoves database shows that the level of new business activity moving through UK media and advertising agencies fell by 22.4% in the first half of this year.
Marketers appear to be putting new product launches and brand repositioning campaigns on hold as they proceed with caution in the uncertain environment. This has led to fewer agency reviews being undertaken and the number of creative and media pitches being won has subsequently dropped.
Analysis over a five year period reveals that total new business in the first half of 2003 is down by almost 20% on the same period in 1999. Within this, new creative business has fallen by 15% and new media wins have declined by almost 14%.
Neil Christie, chairman of the IPA’s new business group, said: “All of the major sectors have been under pressure and there’s less new money coming in. Clients are generally spending less on advertising and marketing budgets are being squeezed.”
The first six months of this year were also less than successful for UK-only business and year on year analysis reveals a 24.3% drop in activity. However, this narrows to 11.5% in comparison with the first half of 1999 and is up by 16.6% on the dotcom bust year of 2000.
A breakdown of UK-only business shows that the number of creative wins in the first half of this year is down by 5.6% on the same six months in 1999, while new media business has fallen by 7.7% during the same period.
Meanwhile, the quality of new business opportunities, which is gauged by looking at the percentage of the top 100 advertisers to have reviewed their accounts, was also found to have fallen during the first six months of 2003. Just 17% of the top 100 advertisers reviewed all or part of their accounts during this period, compared to 23% in the same period the previous year.
There was a cautionary note for agencies hoping to maintain existing accounts and in only 40% of reviews was the incumbent invited to pitch to retain the business. Of those reviews where the incumbent did re-pitch, less than a third managed to hold on to the account.
Just under 30% of all reviews announced in the first six months of this year moved without a pitch. This represents a significant decrease from the same period in 2002, when 38% of appointments were made without a competitive pitch. However, this year’s figure is a major increase on 2000 when just 17% of clients moved their business without a pitch.
The outlook remains uncertain and things look unlikely to pick up until next year at the earliest, as the industry continues to take tentative steps toward recovery. Christie said: “I can foresee no external factors that would lead to an increase in spend, other than a general recovery in the media market.”
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