PepsiCo’s decision to scrap its marketing procurement team in November last year has been the subject of rigorous analysis from the media and industry commentators.
For the WFA’s Steve Lightfoot the move highlights a fundamental lack of understanding (and therefore trust) in the language used between brand and sourcing colleagues. Certainly, in the dark arts of music rights, the area that I operate in, jargon can be particularly impenetrable – working in favour of licensors and against licensees, namely brands.
Putting a price on a song or a sound recording is always difficult. When marketers need licensed music for brand campaigns, both they and their procurement colleagues frequently struggle to balance cost against value.
Brand teams generally rely on their creative agencies for track recommendations – a process which is almost always creatively driven, with less focus on budgetary discipline. Procurement, playing catch-up, try to fathom if the music rights owners’ quoted price can be benchmarked given the required usage rights.
Frequently, this results in a poor commercial outcome. Marketing have no advance proof of the chosen track’s effectiveness and Procurement haven’t the expertise to assess its cost efficiency. Balancing value against cost is guesswork at best.
For more harmonious and educated decision-making, I recommend the following steps.
1. Centralised media buying
Insist that all local markets submit their plans to global brand and procurement teams during campaign creative development. Collate data into a single usage requirement with which to approach rights owners of any third party talent or IP used in the campaign, which includes music.
2. Use competitive tendering
Creative agencies typically seek music solely on its creative merits. Cost is a secondary issue. Mandate that all music tracks must be sourced against a pre-agreed creative and commercial brief, with reference to required usage and budget. Rigorously log the submissions and hold rights owners to account.
3. Start earlier
Insist that the creative agency starts competitive tendering before mood films are researched with focus groups. Test each film with multiple track options, each of which has been pre-checked with rights owners as to availability and cost for the required usage. Map qualitative research output against track licence fees for an informed assessment of potential value vs. cost. Filter out any tracks that under-deliver on either metric.
4. Look for conflicts of interest
While creative agencies are tasked with music sourcing and buying, they usually outsource it – a fact of which brand teams are usually unaware. Outsourced suppliers typically charge 10%-15% commission on licence fees paid to music rights owners. So, although these suppliers are engaged by the creative agency, their commercial incentives often work in the wrong direction.
5. Future-proof licences
Build broad options into licences. Ensure that all possible future uses of the chosen music track are covered - so it can be used across multiple content pieces created by various roster agencies. Mandate that the brand is the licensee and collate all options with pre-agreed fees into one contract with rights owners.
From procurement’s perspective, the above tips sound like common sense – but can marketing rely on their creative agency to take the initiative or comply? If this seems like a battle that the brand won’t win, perhaps the logical alternative is to de-couple music sourcing and buying from creative agencies?
☛ Richard Kirstein is founding partner at Resilient Music. His book, Music Rights Without Fights, The Smart Marketers Guide To Buying Music For Brand Campaigns, is out now (Rethink Press, £14.99)