Welcome to the Age of Procurement
Published in Nov-Dec 2021
Antipathy between creative prima donnas and bean counters is as old as the hills. The arrival of procurement in agency pitches (about 15 years ago in the UK) triggered plenty of these ancient prejudices. Disparaging comments were made about how “procuring widgets” was different from buying “the magic of creativity.” But the writing was on the wall.
Clients wanted it and whispered it quietly, with good reason as some agencies had been making fat profits because of a lack of scrutiny (from production, for example). Media buying has always had a murky side – but especially now. Online media buying is now highly technical, providing plenty of opportunity for sharp practice because of “extreme asymmetry of knowledge.” Media is the big-ticket item in any marketing budget. Marketing directors had to understand it better – or else they would be ill-prepared for tough questions from finance directors.
Knowledge Bank for Aurora Readers
UK agencies have been living with procurement for over a decade – and there is now a body of good advice available to Aurora readers for free. I would start with the Institute of Practitioners in Advertising (IPA), which partnered with the Chartered Institute of Procurement and Supply (CIPS) to develop rounded advice and case history learning. (The IPA website has a search facility – just type in ‘procurement’.)
Here is my take on it, which rings true from my time as an agency CEO.
Get Everyone Together at the Start
There are, of course, several interested parties in a procurement process – procurement itself, the agency and its finance department and the marketing team. The first step is to define a process and lines of communication. Also, establish relationships and a mutual understanding. At a kick-off meeting, ask an open question: “What does success look like for all parties?” Everyone has a boss and will need to report back their contribution. A top tip: it is likely that an agency finance director will share the mindset and training of a procurement person – so it will be useful to establish a relationship between the two from the beginning.
Be Clear and Open
When you gather people who have different values and ideas of success, there is plenty of scope for misunderstanding. So, all parties should be as clear and jargon free as possible. A top tip: marketing directors should publish what the criteria for agency selection are, as well as the scope of work.
Define the Added Value Expected From Your Agency
Brand owners are, remember, ultimately buying effectiveness rather than the cheapest agency services. Here, the responsibility falls to the marketing team to define what is added value and what is more of a commodity. What keeps your brand healthy and profitable? Is it a big idea that integrates all your communication? Is it new and innovative ideas that attract new customers? This is where the price needs to be balanced against the quality and experience of the talents at the agencies. Not clear on this? Then you need to invest in strategy before going to pitch.
Strategy Makes You More Efficient and Effective in the Long Term
Strategy questions are the ones you have to answer or you stand little chance of being effective. Such as: who are we really talking to? Are we aiming for new customers or seeking loyalty from existing customers? What motivates these customers to behave in a certain way or think differently? What have we learnt about effectiveness from past campaigns and does our thinking about effectiveness need to change? What is changing in the competitive and wider cultural context and what opportunities and threats does it present for our brand? Clear on this? Then:
Seek a Partnership, Not Just the Lowest Price
Ideally, there should be an opportunity for an upside for performance: can you, as a marketing director, define what outcomes you seek and how this will be measured as the basis for performance related pay? This sends an important message – we are seeking value and partnership and not just the lowest price.
It Is Relatively Easy to Organise a Competition to Get the Lowest Price
It is also beguilingly simple to report these savings back to the board. All looks good in year one. But if you have driven your agency down too much, they will not be able to afford the time and high-level expertise to build an understanding of your business and therefore a partnership. Why does partnership matter?
Partnership Increases Effectiveness
The evidence is clear from effectiveness awards – the majority of awards are won by agencies and their clients who are in a long-term relationship. Pitches by contrast are time consuming and expensive. New relationships take a while to bed in and deliver results. So, procurement objectives should be to create the basis of a long-term relationship. Top tip: If you are in procurement, take the time to understand how agencies work and how they perform best.
Beware of the Agency With the Cheapest Rates
An agency may be cheap because it is lean, well-run and has cut unnecessary costs (such as an expensive office building). In which case, all is well and good. But check that it is not cheaper simply because it has inexperienced staff and is offering fewer senior staff for your account. Certain jobs require experience – such as managing a multidisciplinary team, strategy and creative direction.
Can You Save on Creative Development?
This is also an expensive line item on the budget, especially if you need many campaigns every year (as is typical of most retailers, for example). Direct response type advertising can be developed efficiently – and AI tools are being developed to do so without much intervention from humans. Technology can make these campaigns more efficient and cheaper. Look for your agency to invest in and understand these tools. You may also have other creative needs. You may also want advertising that is fresh and different, as AI tools tend towards norms rather than distinctiveness. If you are producing many ads, another question arises: how do all your ads hang together – through a campaign idea or a visual language – that can be expressed in different ways in different media? That will require investment in brand strategy and, in particular, creative direction. Why does this matter?
Campaign Ideas Pay Back
Ideas, not just cheap execution, also make you more efficient and effective. How so? Creative people find it quicker and easier to develop new executions within an existing idea. Campaigns ideas both stimulate short-term sales and also create long-term brand meaning (‘memory structure’ in the jargon). They deliver both sales and saleability.
Can You Save on Time Management?
The digital revolution presents many opportunities for efficiencies. In the way we work, in how we book, manage and report campaigns. Take full advantage of these. But don’t do it at the expense of developing relationships. Technology is a tool and not an end itself.
What Is Right for You?
Not all of my notes may apply to your particular procurement. But there is a good chance that online research at IPA’s website will produce something useful. Boil it down to one thing and I would say this – invest more time than you think is necessary in communication and mutual understanding in order to make procurement work for you.
Julian Saunders is Founder, The Joined Up Company and former CEO, Red Cell (a WPP creative agency) and Head of Strategy, McCann-Erickson. email@example.com
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