Agencies need to stop ignoring procurement as its influence continues to grow in marketing
David Angell
Agencies need become better at handling procurement people and stop ignoring them during the pitch process as its role in the marketing mix will continue to grow, a panel of experts has warned.
Speaking at the Secrets of Agency Excellence conference David Angell, general manager and head of media at Trinity P3, said he had been in pitch meetings attended by procurement where they had been completely ignored by agency staff, an approach which needlessly damaged the relationship from the very beginning, and urged agencies to “include them in the chemistry session”.
John Turner, marketing practice director at Infosys Portland added agencies need to remember “procurement people are people too”.
The role of procurement in marketing has been a bone of contention with advertising agencies which fear the “bean counter” approach to purchasing marketing services is damaging the relationship between marketers and hindering brands.
One of the most vexing issues for both agencies and procurement departments was the reliance on the measure of time – using rate cards and head hours as measure for agency remuneration when it came to procurement departments, an issue which is far from being solved.
Jason Penrose
“There is an appetite for something different, but I don’t think someone has actually defined what that is or what that looks like going forward,” said Jason Penrose, executive commercial manager – marketing, media, digital and customer experience with Westpac Group.
He said the business of procurement had moved on from “men in brown suits” to a more holistic approach acting as a support function in the space.
“Like it or not, there is undoubtedly going to be an increasing role from procurement,” said Penrose.
However, the panel, which also included David Angell, general manager and head of media at Trinity P3, and John Turner, marketing practice director at Infosys Portland, agreed one of the simplest solutions to the issue was dialogue and education.
Penrose said the need to educate procurement about the role and opportunities of working with marketing and with agencies was a key to building a better experience and a better outcome for all involved.
Agencies also needed to understand that procurement should not just be involved in the process at the beginning, overseeing the purchase function, but should remain a part of the process throughout the life of the relationship so they could gain a better understanding of the business and become part of a value chain that was not focused on lowest cost, but outcomes.
“They are not just looking at cost, they are assessing risk, so more agencies need to come across as being low risk,” said David Angell.
He said by ticking simple boxes on the procurement worksheet, such as risk, it allowed the agencies and procurement departments to focus on the bigger picture.
Penrose said there were real opportunities for agencies which “get it right”.
John Turner, marketing practice director at Infosys Portland said that in a dry business often engaged with purchasing hardware and big ticket items, procurement experts were wanting to work with marketers on something they saw as more invigorating and interesting.
“Wherever a company is spending money the guys in my office are wanting to work on marketing. Procurement people are curious about marketing and they do want to get more understanding of it,” said Turner.
Simon Canning
Oh what a load of tripe.
When a pitch comes along, the procurement people tell us the process.
The procurement people give us the spreadsheets to fill in.
The procurement people handle the questions.
The procurement people are in all the pitch presentations.
The agency staff are well aware that the procurement staff/consultants are key decision makers and so are never ignored. Why would we ignore a key decision maker?
Honestly have no idea who or which agency has hurt his feelings by ignoring him in a meeting, but I can guarantee you 99% of agencies would not be ignoring procurement.
As to the statement procurement “are not just looking at cost”.. i can definitely say having dealt with Trinity P3, that COST is a major focus in every pitch. As it should be with millions of dollars involved. But please dont treat us as idiots and downplay the cost side – it may not be 100% of the decision but it certainly feels like 90% of the decision judging by the number of questions and data requests focusing on prices.
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Most pitches i’ve been part of (lots) – procurement are barely introduced by the consultants (many inc. P3) and sit at the back of the room keeping time and not much else. No questions, no involvement.
Very hard in a chemistry session or presentation to proactively try to involve them when all body language and communications suggests they don’t want to be.
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Isn’t procurement’s role to come in post pitch, when the agency is exhausted and battle scarred then demand a 50% discount?
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In the rare instance you get a procurement person with a good knowledge of marketing, advertising and/or media the process can be really good. I’ve had it once, and the idea of value was able to be considered along with costs. They were comfortable with a degree of grey in a largely black and white world.
When procurement have no understanding of what agencies do it becomes very frustrating for everyone (agency and procurement). Agencies struggle with procurement’s spreadsheets and procurement struggle with incessant and seemingly endless and finicky agency questions (we’re going through this again right now).
Spreadsheets for all their value, aren’t very good at bench-marking the possible impact of a killer idea for a brand, regardless of what Trinity and Portland might say, cost becomes the main factor.
You can’t manage what you can’t measure, and procurement want to manage cost. So of course the process becomes very focused on rates (head hours, media, whatever). Ideas are far too hard to measure, head hour costs and rates on the other hand, get out the hatchet!
As for risk, give me a break. Risk of what, exactly? What a flaky diversion to try and create some meat in the argument other than cost.
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Don’t think so…
https://www.warc.com/LatestNews/News/PepsiCo_scraps_procurement.news?ID=35729
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@The Truth – and yet when the time comes for that conversation about money, it’s the agencies that depressingly drop all their principles and meekly comply with every demand. (Usually against our advice, by the way. We’ve written about that before here: https://www.trinityp3.com/2015/03/when-money-talks-in-a-pitch/.) Engagement with procurement is not the same as submission.
Oh, the anonymous ones, nice to see you!
Lets talk about some of your commentary. Cost is of course a big factor, but what we (good consultants and procurement) want to do is equate cost to value and as much as possible, and ultimately use value as a primary assessment factor. So we do have to collect data as a part of that process, but data is not the only part.
I’ve been involved with pitches this year where the winner was, on paper, the most expensive agency by some margin. Why? Because the cost in was balanced in structure, market-commensurate and justified based on the perceived value out, and the agencies who did win, demonstrated this – including with procurement. Yes, it doesn’t always happen this way, and yes (as we discussed in session) skills of procurement people in the marketing category are not uniformly great, and the influence not always healthy. But what is indisputable is that there is a recognition from within procurement as an industry that it needs to evolve its approach and focus when working with areas like marketing. TrinityP3 as a consultancy is committed to trying to help this evolution in practice, where we can. Read our blog, look at our testimonials, if you want to understand this further.
Look, at the end of the day, no-one is saying that things are perfect. We were asked yesterday to talk about some of the things agencies can do to help themselves, and procurement, in the pitch process and in ongoing relationships, based on our collective experience. You can be negative, cynical and whingy and do nothing to help change, as is your right, or you can try and think differently when you next approach a pitch – who knows what might happen. Your call, either way I wish you all the best.
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How many of these pitch consultants are actually across what agencies do. They rely on being sent updated creds and maybe once every 2-3 years pay you a visit. When was the last time you got a visit? Had an in-depth discussion?
Given the rate of change in this industry, knowing what an agency does and can do, goes well beyond a creds document and spreadsheets. If pitch consultants were serious about client value, they’d be serious about their own agency relationships.
And this alone is why pitch consultants are woefully inadequate and largely irrelevant.
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Dear “The Third Umpire’s of a Game Nobody Wants to Play”, TrinityP3 provides a free, confidential online register where all agencies can register their details and provide updates and insights into their work, capabilities, key staff and the like. Check it out here http://www.trinityp3.com/agency-register/ More concerning for you is that TrinityP3 consultants (and there are more than 20 of us) visit agencies each week. In fact in the past 12 months we have visited more than 200 of the top creative, digital and media agencies in Australia. Clearly we have not been to yours.
@ Third Umpire.. absolutely correct. Procurement consultants are just another symptom of marketing departments being lazy lightweights who aren’t capable of decision making or analysis on their own. Amazingly for all of the rigour applied to their processes, they still manage to come up with dud relationships.
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@darren – why the bitch pill?? wouldn’t it just be easier to state the criteria you used to visit said 200 agencies (ie hope it wasn’t simply as they were on your clients roster already) and who they were? Why have a go at someone ad hominem, doesn’t make your’s or their point better.
@ David – yes, anonymous as without that auspice one can clearly see that they may be treated differently by TP3 (as per Darren’s comments). May i suggest you look at feedback in the main on Mumbrella as constructive regardless of the author as, like focus groups, i’ve never been on the side of telling clients which customer gave them negative feedback as it really doesn’t matter – they either have the problem or they don’t.
On procurement – don’t get why creative/customer experience outcomes and objectives aren’t set and whoever they feel BEST delivers those gets the gig…money should be secondary to lost business….shouldn’t it? It is in tech land where Conversion Rate Optimisation beats price in a smackdown everyday.
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Hi Simon Canning,
Thanks for the article.
I’ll be the first to acknowledge that procurement can be a prickly bunch to work with. The focus can often be on cost and process without a true understanding of how or what can be done to genuinely contribute to where a business is headed.
As a prior in-house procurement professional and now Director of the consulting firm Synthesis Group, I see the growing need for procurement to develop constructive commercial relationships with their key suppliers.
In some industries, this mutually beneficial relationship may result in preferential access to new innovation and technology, favourable commercial metrics and the best people. In the arena of marketing and advertising, healthy margins (not exorbitant pricing) need to be present to encourage the creativity that is precisely what a client is paying for in order to differentiate and propel a product or service forward.
This is all possible but two things need to be satisfied:
1. Procurement needs to lift it’s game. Process needs to be flexible, the operations of business understood and suppliers need to be seen as allies.
2. The supplier needs to be able to walk in procurements shoes. Understand their drivers, motivators, aspirations and fears.
If this is done, if the hostile nature that can accompany an engagement is removed then this opens the way for collaboration that will yield fruit for both agency and client.
But first we need to improve how we work with procurement.
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Hey Oops – vested interest, no ‘bitch pill’ more disappointment in those in the industry quick to complain about topics where they are factually incorrect.
As Mark Twain said “It’s better to keep your mouth shut and appear stupid than open it and remove all doubt”. Luckily they are able to hid behind the anonymity Mumbrella extends to them to protect them from themselves.
In regards to the more than 200 agencies, these are agencies that either request we come to visit them to learn more about their culture and capabilities or who we have identified as of interest to we can stay up-to-date and informed on what and whom are available and a best fit for our clients needs. It is homework if you like. And if you feel inclined to do some homework check out the TrinityP3 Agency Register here http://www.trinityp3.com/agency-register/
As an Agency partner will a lot of skin in the game, I think this article is a load of absolute self-serving dribble. TP3 is obviously attempting to enhance their reputation and relationship with procurement departments.
With all due respect to David and Darren, in my role, I have met numerous procurement personnel in a cross section of industries. Let me tell you they don’t understand the dynamics of a marketing department nor of an advertising agency.
In my humble opinion, procurement departments should attend to sourcing items like stationary, toilet paper, coffee supplies and maybe electronic hardware – leave the appointment of an Advertising Agency to senior marketing people who may perhaps utilise a service similar to TP3.
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We’re in an age of disruption.
Any brand relying on procurement to determine how they make stuff famous, only deserve to get disrupted.
No offence procurement but your value add is making our work cheap.
No-one is ignoring you. You’re just not very invested in the relationship
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David & Darren – seriously don’t insult our intelligence! Procurement personnel are not skilled nor qualified in the selection of a communications agency. I’ve worked with these guys and as skilled as they are this is way above their capabilities. Therefore, why are you two sprooking their importance in the process- nothing to do with a vested interest, of course not!
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Current situation: We are incumbent on a client that has gone for open market pitch. This despite a good relationship and stable team and exceeding all KPIs for last 3 years. But a Procurment consultant has gone to them and said they should go to open market because “its been 3 years”. Not because we are failing.
The pitch process now involves submitting responses online, in a live e-procurement system where we have to enter prices live and get to see where we rank. Basically a reverse auction to get to lowest price.
This is happening now.
Dont give me this BS that procurmenet is not about cost
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