Following the recent flurry of articles on marketing procurement for suppliers, Sarah Billson explains how buyers can develop a true partnership with their vendors in this tricky category
With turbulent times comes an increased emphasis on saving money. I believe strongly the current economic malaise offers an unrivalled opportunity for positive change. Especially for those clients and agencies who understand the meaning of, and are open to embracing, the benefits of a true “partnership”.
Historically there has been much discussion and debate surrounding marketing procurement. “Buyers don’t understand the category”, “Agencies are just not commercial enough”, “Both parties have things to hide”. Ad infinitum
But if ever there was a time to put different positions to one side and begin to seek the means to work in true partnership, it’s now!
When client companies seek to reduce their cost of doing business, they tend to examine areas of discretionary expenditure first and marketing is usually one of the largest cost centres under examination.
For marketers this means having to make tough decisions. What activities should be put on hold, scaled back or perhaps cancelled? But how many marketers understand (or frankly, care about) the effect their budget pruning will have on their agency partners? At best agencies will experience reduced income and margin rates. At worst they will be driven to the cusp of insolvency as the true costs of doing business become apparent to them.
This is a real opportunity, now, for marketing procurement to be involved and add some real and sustainable value to the client/agency relationship.
Working with both marketing and their incumbent agencies, procurement needs to take a long-term, strategic approach. Unravelling all areas of spend, reviewing the total ‘supply chain’ from idea conception, through briefing, to execution and evaluation – on both client and agency sides.
Through mapping both internal and external processes, we can identify areas of inefficiency and wastage take steps to eliminate unnecessary spend.
This holistic approach can, in many cases, deliver much of the demanded client cost savings without reducing agency remuneration to an unsustainable level.
On the other side of the coin, agencies need to proactively identify cost savings for themselves and their clients. By taking a pragmatic, priority-based, budgeting approach (where brand image and creative expression is ring-fenced) costs can be taken out of the delivery process. Procurement specialists in this category need to work with the key agency partners to assist them in the delivery of improved value and service at reasonable prices.
Negotiation must remain a key element of the client. Agency partnership charges must be justified, and margin rates need to be sensible. However, procurement must ensure they agree prices that are sustainable. In other words they must understand the impact of their prices on their partner agencies’ businesses.
How often do we hear that agencies have to “share the pain” these days? But how many clients truly understand how disproportionate this sharing really can be?
In recent months, sadly I am seeing too many cut–throat deals with a “take it or leave it” ultimatum to struggling agencies. Although these might deliver absolute cost savings, they can also reduce the seniority and experience on a brand, resulting in less creativity which is not conducive for either party. At worst, they drive the agencies out of business.
From a procurement point of view, this approach is the worst of short-termism, and makes a mockery of any pretence of a “partnership” between client and agency.
The understanding of this category and the skills to deliver value without long-term commercial damage to one’s own brand, is what sets category specialists apart from more generalist buyers.
If purchasing and marketing can really work together, and work inclusively in a spirit of true partnership with their agencies, then they can deliver a new way of working that is transparent, fair and profitable for all parties, and will deliver positive benefits way past the current economic malaise.
Brands should be nurtured and protected, as should valuable relationships, and never before has procurement had such a key part to play in this process.
* Sarah Billson is director of marketing procurement consultancy Tickling the Trout