Why is it that when folks from procurement knock on a marketer’s door, the marketer is inclined to slither under his or her desk? And when an agency hears that a procurement department is involved in an agency search, they mutter profanities under their breath, but pony up to try and win the business. Come on, it’s not the dentist!
Increasingly the procurement or strategic sourcing department is inserting itself into marketing agency searches, contract negotiations and consolidation exercises. Advances in corporate governance, thanks in part to Sarbanes-Oxley, the current recession and even the Quebec sponsorship scandal, have placed marketing decisions with financial implications under the procurement spotlight like never before.
In November 2008, the consulting firm Reardon Smith Whittaker surveyed 184 senior U.S. marketing decision-makers and found that 24% of them said a procurement specialist was involved in their most recent selection of a new agency, up from 21% in 2007.
Agencies themselves have a negative perception of procurement’s involvement. In February 2009, AgencyLink surveyed 106 Canadian agency leaders for their views on client-agency relationships. When asked about their clients’ partnership with client procurement, including educating procurement about agencies, 37% of Canadian agency leaders said the procurement-client relationship was weak, while 57% said it was average/sufficient. Only 7% said their clients’ relationship with procurement was excellent. European and U.S. results from another 510 agency leaders responding to the same survey question were consistent with the Canadian agency view.
As a corporate marketer at IBM Canada in the early 1990s, I was fortunate to work with a procurement team that was embedded within marketing. It was staffed with marketing procurement specialists who understood the nuances of purchasing creative and production services. Price was only one of the criteria they considered in agency selections. Most important, they viewed hiring an agency as an evaluation process, not a competitive bid. Few firms are as fortunate as IBM.
Later, as an agency CEO, I responded to well over 100 RFPs. Unfortunately, the ones that involved procurement were usually tremendously long, written in legalese, and sought irrelevant information. The marketing client would usually whisper “…sorry, but procurement wrote the RFP document.”
What can be done to bridge the divide between procurement and marketing? Here are five tips I’d recommend to corporate marketers. A few of them are original, while some are adapted from guides published by the Association of National Advertisers in the U.S., and the Association of Canadian Advertisers in Canada.
Embrace the Opportunity:
Marketers need to take a positive approach from the get-go with procurement. Even better, proactively ask procurement to be in involved in contract negotiations or agency reviews. Marketers need to get over the inclination that procurement specialists are going to get in the way. That attitude rubs the procurement team and ultimately leads to an unhealthy relationship. If marketers embrace procurement and vice versa, positive collaboration is much easier to achieve. A non-adversarial relationship leads to better results. As agency search consultants, AgencyLink has had several positive experiences working with our client procurement teams.
Leverage Procurement Strengths:
Procurement can bring many positive attributes to the marketing professional. They have a track record in working with various suppliers and can apply best practices to marketing, helping you avoid sinkholes. They usually have broader and deeper financial experience and are adept at negotiations. Finally, procurement is fluent in process, timeline discipline and consistency in the way it treats your organization’s broad range of suppliers.
Define Roles & Responsibilities:
Marketing must have the ultimate responsibility for the agency relationship. Its role is to safeguard all brand-related issues and to assess the quality of the agency, the framework of the relationship and the scope of work. Procurement’s responsibilities should centre on the contractual agreement, terms and conditions, pricing, and centralizing or leveraging total client expenditures with its agencies. Its role should never negatively impact the creative output.
Remember that procurement and marketing are on the same team. You both work for the same company and should have consistent business goals. Procurement should never undercut the marketer’s authority in managing the agency-client relationship. Similarly, marketing shouldn’t diss the efforts of procurement, even if the affinity for the group is low.
Own the Outcome: When procurement is involved with a real estate function in collective RFP bids for an architect, the real estate group still owns the quality of the building. When procurement assists corporate legal in negotiating external legal fees, the legal department is still responsible for the quality of outside legal counsel. The same applies with marketing. Procurement can be a valuable assist, but the agency relationship and the quality of agency campaigns and programs still rest with the marketing group. Marketing must retain that ownership and be accountable to its agency partners. Never shirk that responsibility or blame procurement for its shortcomings.
There is no doubt that procurement and finance will continue to play a greater role in agency searches and compensation. Rather than bucking that trend, smart marketers will embrace it and leverage procurement professionals for all they are worth.
Stan Didzbalis is a Partner at AgencyLink Inc, a consultancy that conducts marketing and communications agency searches, consults on existing agency relationships and delivers workshops to improve client-agency performance.