The High Price of New Business

New business is the lifeblood of most industries. E-marketing is no exception. As I listened to an analyst discuss new business acquisition in the interactive space at the Jupiter AdForum, I started thinking. If e-marketing is considered a subset of the larger advertising industry, we’re hardly alone. There’s simply not as much new business activity (request for proposals) as in years past.

There are several explanations for the formal lack of business in review. One is companies are so preoccupied with their own reorganization, they want to keep vendors and partners somewhat constant. Another (albeit remote) could be clients are so pleased with their current agencies they have no desire to seek outside help. Increasing demands on internal marketing departments may be another contributor, as well as lack of desire to “bother” with a new agency search. All these could play a part, but my guess is the primary culprit in e-marketing is the phenomenon of “old new business” versus “new new business.”

Defining Old New Business

Anyone will tell you it’s easier to grow an existing client base through up- and cross-selling than it is to acquire new clients. Though this technically qualifies as old new business, it isn’t exactly my definition of the term. Agency structure is a consideration. The e-marketing agency landscape can broadly be divided into two spheres: standalone and integrated agencies. Standalone agencies include companies such as Avenue A and Modem Media. Integrated agencies, which are part of larger communications companies, include The Digital Edge (Young & Rubicam), Tribal DDB, digital@jwt, OMD Digital, and Universal McCann Interactive.

In terms of aggregate billings, integrated agencies vastly outweigh the standalone companies as the trend toward holistic (integrated) communications intensifies. Five years ago, the standalone digital agency was the norm. Today, the opposite is true. As such, a whole sector of interactive business is mined from within larger agencies. An advertising agency with 100 clients may have the interactive group working with only 50 of them. Slowly and steadily, the pursuit of old new business is a constant “silent pitch” without formal reviews or outside agency involvement.

Pursuing Old New and New New Business

Unsurprisingly, there are different methods for pursuing old new business and new new business. Old new business pitches are conducted with a combination of standard credentials, capabilities, and case studies, mixed with a thorough understanding of the client’s business issues. This knowledge comes from leveraging the collective agency experience with the company and/or industry. New new business is more challenging. It’s operating with limited insight and on a more level playing field.

There’s a high price to pay in terms of hard costs and employee time when pursuing new new business. At Jupiter AdForum, we looked at scenarios using standard agency hourly rates. The “average” pitch costs approximately $35,000. Do a few of those a year and costs really add up.

In the pursuit of new business, you must wrestle with how far to go to convey strategic thinking and creative capabilities without giving away the store. Pitch questions you’ll tackle include:

• Will you build a full-blown media plan?
• Will you do creative concepts with storyboards and illustrations?
• Will you take it a step farther and build fully functioning creative?
• What’s your competition doing?

There are no easy answers. Sometimes, it’s easier when the pitch calls for a fully baked solution. You elect to play along or pass on the opportunity. Occasionally, you’ll just provide illustrative examples targeted to the same demo- or psychographic group, or industry category.

With the overall reduction of new new business up for formal review, maximizing your current client base is imperative. Whether these are clients that currently utilize your agency for interactive services and can be converted into a larger revenue opportunity or clients affiliated with the larger agency network, they’re the low-hanging fruit. Fully satisfy your old new business hunger before journeying out into the wilderness of new new business pursuits. It saves time, money, and precious agency resources.

Happy hunting!