In 2013, I watched Meredith Levien, then the chief revenue officer of Forbes (and now COO of the New York Times), give a presentation about the insanity of the transactional RFP, those lovely paper-pushing documents that spin sales teams’ wheels.
She walked the audience through how Forbes got its revenue: 10 percent from programmatic; 45 percent custom or premium programs; 45 percent from the transactional RFP, where the sales team would pump out dozens of proposals per week, only winning a handful. Her point, as Chris O’Hara wrote way back then:
“The latter is the type that comes from continually responding to agency RFPs for standard IAB banner programs, with little customization. Levien questioned whether that type of transactional business was completely on its way to becoming driven exclusively by technology.”
For agencies, it makes sense to send out RFPs, as they can often take what they receive back from the mini-militia of publishers that respond and get a wider view of the market. It can also help them win new business, as they can use RFPs to show potential clients what they could be getting if only they hired them.
A new report from Comvergence yesterday found that the “Total volume of media account turnover declined 51% to $2.9 billion from $4.95 billion in the first quarter of 2019.”
"Yes, there was a slowdown in Q1 2020 vs. Q1 2019, but the real impact of the pandemic is likely to reflect on the First Half 2020 results," notes Comvergence Founder and CEO Oliver Gauthier, suggesting the second quarter will be even more pronounced in terms of the slowdown in new media business activity.
"As of today, we recorded about $4.3 billion of reviewed media spend (vs. $11.4 billion in the first half of 2019)," he explains, adding, "considering that a couple of global/multi-country pitches have been either put on hold or just canceled, including Burberry, AB-InBev, Telefonica, to name a few."
This will undoubtedly have an effect on the RFP.
For publishers, the RFP is a time-suck. A 2013 report from Digiday and Adslot found that publishers spend 22 hours per week on a single proposal. That’s half the work week spent on a pretty low success rate.
When I was on the business side, I’d often bang my head against my desk after reading an RFP.
“We want something that has never been done before! But it has to look like this other thing we like. Also, we need the idea by tomorrow.”
The best RFPs always came when a sales rep had a few meetings with the buyer, getting a full understanding of what was needed, and then crafting a spot-on pitch. Those were rare.
While there were custom responses to ‘the big idea’ RFP, many publishers’ ad sales marketing teams would just create tiered templates to respond to the agency requests. When you’re creating deks that are copy/paste of other deks, no one wins.
But what happens at a time when buyers and sellers are sequestered? When advertisers aren’t spending, or at least not spending on ‘the big idea?’ Do RFPs spike up or do they wither on the vine, waiting to shrivel up? To use my least favorite words in the English language: It depends.
One agency executive, speaking on the condition of anonymity because they weren’t allowed to speak publicly about internal processes, told me that their large media agency is seeing a lot of RFPs right now.
“I will tell you this,” the exec told me, “this is the best time for a quality advertiser to get great attention on a pitch. This idea of teams being remote and holding off on pitches is baseless because we are all working and frankly, really enjoying the pitch process.”
RFPs are up for Business Insider, though that isn’t consistent for every publisher. For example, BI reported yesterday that The Skimm has seen a 75 percent drop in RFPs post-pandemic.
“The challenge is a lot of deals in process were cancelled or reimagined,” said Pete Spande, BI’s chief revenue officer. “So a lot of open opportunities were just abandoned in March and we are now redoing a lot of proposals we had already shipped. So they are up but not ‘net new RFPs.’”
In a post-coronavirus world, though, we may actually see the end of the transactional RFP. Spande, for instance, believes that RFPs will go from the “cattle call” process, where agencies send out to tens, and in some cases hundreds, of publishers to a more targeted approach focusing on individual outreach.
“We see many conversations as direct discussions about a project rather than a huge audition,” Spande said.
Over the last couple of years, publishers say they haven’t used RFPs for big-ticket campaigns. This tracks with other publishers who have been working more closely with advertisers, in many cases bypassing the agency. One publisher recently told me they see about 80 percent of business come through direct sales. Why go through an intermediary when you can go direct?
The rise of programmatic buying has been an accelerant to eliminating the transactional RFP.
“Programmatic has and will continue to reduce the number of RFPs,” Spande said. “Multi-site, dynamic media programs executed programmatically mean many RFPs of old are eliminated. Basically, the RFP is for special projects and for products that possess high sellthrough rates or are in very limited supply.”
If the industry could hop off the transactional RFP treadmill, imagine the what could happen:
Publishers can craft better ideas and solutions for their advertisers;
Advertisers can work more closely with publishers, and have the ancillary benefit of actually knowing where their ad runs.
Dire Straits, “Money for Nothing”
Thank you for allowing me in your inbox, today and everyday. As this newsletter continues to evolve, I’m thinking about paid subscriptions and possible advertising. A boy’s gotta eat! I’d be curious to hear your thoughts: would you pay for this newsletter? would you be ok with text-based/link advertising? Let me know!
Some interesting links:
Gannett is planning a combined ad and news-side extravaganza on ‘Rebuilding America’ (Poynter)
SmileDirectClub Sues NBC Over News Report, Seeking $2.85 Billion (WSJ)
Why the Uncle Joe-Can’t-Internet criticism is mostly malarkey (Vanity Fair)
How the ‘Call Her Daddy’ Feud Boiled Over (NYT)
Vox Media research shows how the pandemic has accelerated changes to consumers’ preferences and actions (Vox)
Succession insults (Alexis Lloyd)
Welcome to the lemon market (Branded)