In news that surprised much of the industry this month, not least long-term incumbents Omnicom, PepsiCo appointed Publicis to its global media business – without a pitch. It’s the fourth time in the last year that Publicis has bagged a major media client without a review: LVMH’s APAC business and its Tiffany account in the US; Microsoft; and a large tranche of the Paramount business.

It’s true that pitches are time-consuming and expensive for both agencies and clients, but most companies want the reassurance of a formal pitch process when making a decision as important as who will manage their media investments. That’s particularly true when the company in question is a public one as huge as PepsiCo, with a vast media budget.

There is much to explore in terms of Publicis’ success, particularly at a time when its major competitors are dealing with internal disruption to varying degrees. But the PepsiCo win also raises an important question for all marketers: is a lengthy, expensive global pitch process always necessary? In PepsiCo’s case, Publicis wasn’t an entirely unknown quantity. The holding group already handled the company’s media business across a number of markets, so PepsiCo already had a clear understanding of how the agency worked and what it could deliver. The decision to expand that relationship globally without a traditional pitch therefore underlines the value of continuously evaluating agency performance and building trust over time.

When is a pitch the right answer?

A pitch can, of course, be exactly the right route. It creates competition which often drives prices down; it gives advertisers the chance to compare different capabilities and approaches; and provides a structured process for testing chemistry, commercial models and strategic thinking. However, it can also become the default answer when issues arise within an agency relationship, when there may be other, more pragmatic and effective responses.

If a client is dissatisfied with their agency’s performance, struggling to get the transparency they need, questioning the commercial model, unhappy with the people or tools working on their account or simply feels that the relationship is losing momentum and has become a bit stale, a full competitive review is just one option – and might be throwing the baby out with the bath water.

A pitch is only a moment in time

Benchmarking, renegotiating the contract, reviewing remuneration or a structured assessment of the current agency may be able to reveal whether and how the relationship can be improved without having to start from scratch. A full pitch still has an important role when there is a genuine need to test the market, change capabilities or rethink the operating model. The key is to make sure the process is solving the right problem. This is especially worth considering given that a pitch process is just a moment in time, and is when agencies wheel out all their best people and shiniest toys to impress the advertiser in question. This is understandable, but it only demonstrates what the client-agency relationship could look like at its best. What will it look like in the months and years ahead, when the novelty has worn off? That is where the real value lies.

What makes an agency relationship successful?

The questions that really determine whether a relationship drives value include: who works on the account? How are objectives translated into KPIs? Are responsibilities clear? Is remuneration aligned with the behaviors that the advertiser wants to encourage? How transparent are the agency’s trading practices and additional revenue models? What happens when performance falls short? How often do the advertiser and agency step back from campaign delivery to assess whether the relationship itself is still working? These questions have a crucial impact on the value that an advertiser receives over the lifetime of their relationship with the agency, but they’re often less visible in a major pitch process and all the bells and whistles that it entails.

The unglamorous nuts and bolts become even more important as the client-agency relationship becomes more complex: while proprietary media, technology platforms, data products and new commercial models can all create value, they also increase the need for clear contracts, governance and transparency. The more complicated the relationship becomes, the more important it is that both sides understand exactly what’s expected of them.

This all means that advertisers should be wary of assuming that appointing a new agency will solve an old problem. If issues like unclear expectations, weak governance or poorly aligned incentives are at the root of difficulties with an incumbent, choosing a new agency without changing the structures that support the relationship means that the problems are likely to re-emerge, even if they are concealed at first by the fresh thinking and renewed energy of a new partnership. It’s tempting to place too much emphasis on selecting the right agency, and not enough on the work required to manage the relationship once it is underway.

Strong relationships don't happen by accident

The strongest advertiser-agency relationships don’t happen by accident. They are built over time through less glamorous but more robust practices: clear expectations, aligned incentives, systematic monitoring of delivery, regular and objective performance evaluation, transparent reporting, and a willingness to identify and address any problems early. Trust is important, but it is strongest when it is supported by evidence that the agency is consistently delivering what was agreed.

PepsiCo’s decision to give Publicis its business without a traditional review might seem risky, but it serves as a reminder that however an agency is appointed, what truly matters is what comes afterwards. Ultimately, that’s where the value is won – or lost.

ECI works with advertisers across the agency relationship lifecycle, from deciding whether a pitch is the right route and managing the process, to reviewing contracts, remuneration, governance and ongoing performance.