Thousands of advertising executives are hammering out deals worth millions of pounds without adequate preparation, with only just over 1 in 10 creating long term value for their businesses; half the global average across all sectors.
So says what is claimed to be world’s most comprehensive study into business negotiations, which finally exposes the advertising industry’s “all mouth, no trousers” approach to deal-making.
The Scotwork International Negotiation Skills Survey explores the tactics employed by over 5,000 executives in some of the world’s largest organisations across 31 countries and 51 industries.
It lifts the lid on the methods used in the advertising industry to negotiate better deals with clients and suppliers, who are relentlessly focusing on costs.
Over one in three respondents routinely strike deals worth over £1m but a lack of preparation and negotiating skill in advertising is leading to poor returns, with the sector substantially behind global averages in some key areas.
It finds that most advertising sector negotiations fail to deliver long term value: only 12% of negotiators in the ad industry always create long term value for their businesses – that’s half the global average across business.
Poor preparation is resulting in bad trades, with 40% of executives in advertising never or only occasionally having a fallback plan if things go wrong – that’s 10 percentage points more than the global average. A startling nine in ten advertising executives do not always have a plan B before they start negotiating with media or clients, and 61% frequently or occasionally have no time to prepare.
The average negotiator is a poor negotiator: 60% of advertising executives in negotiating positions do not always know what the best outcome of a negotiation would be before they even start; and only a quarter (25%) can always identify the benefits of what they have negotiated once the deal is done.
Scotwork UK director Richard Savage said: “This is a wake-up call for the advertising sector. With clients relentlessly focusing on costs and media analysis and buying being increasingly influenced by automation and artificial intelligence, the advertising sector must improve how it negotiates for benefit.
“Poor negotiating behaviour can adversely impact relationships and outcomes. Whether it is lost revenue, missed opportunities or damaged relationships, getting negotiating wrong hurts a business like little else.
“The most common mistake is to pursue as much of what you can – typically money – in exchange for nothing. If advertising companies fail to see the value of exchange, of trade, they are missing out in ways that far exceed pounds and pence.”
The Scotwork report also reveals the lengths all negotiators will go to in order to influence the power balance during negotiations. Some 46% of buyers have been lied to during negotiations, 37% of sellers say buyers have delivered veiled threats, over half make false claims, set false deadlines or refuse information, and 60% of sellers have reneged on an agreement to suit their cause.
Savage added: “Commercial negotiations are not for the faint-hearted and our study demonstrates just how prevalent cut-throat tactics are. The fact you might encounter challenging approaches makes it all the more important to have clarity on what value you wish to secure from the negotiations in advance. It is therefore all the more concerning how few businesses have this clarity before they sit at the negotiating table.”
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