THE involvement of procurement departments in advertising pitches has become a hot topic for
agencies and marketers alike. So is the trend a good thing for the industry? We asked our expert panel.
Bernie Brookes
Chief general manager—supermarket buying and marketing Woolworths
The use of alternative parties provides a fresh new set of eyes, removes any baggage and helps establish a degree of impartiality. Good procurement departments understand value is not solely measured by price. If the procurement department is used to evaluate the pitch and is part of the process rather than the owner, then the marketing team can still, and should, have a major role. [The involvement of procurement departments in pitches] provides no less or more opportunity for change in the agency—good evaluations will always identify the best partner.
Nick Cleaver
Chief executive
DDB
Perhaps contrary to popular agency perceptions I’d have to say that not all procurement departments are bastards. There are those that are good and whose involvement can be positive to the negotiation and those that are bad in that their mentality is one of “screw the supplier” with no regard to the implications this may have to the quality of the service being offered.
When the procurement department has been involved in the pitch process, at least to the extent that they understand what the organisation is seeking in terms of deliverables, I’ve found they can be a useful voice of impartiality actually ensuring that the resources that are being offered up by the agency are adequate to ensure client expectations are met. At least as professionals in this arena they have the expertise to conduct a rational negotiation. There is nothing worse than negotiating with a client when sheer dogma is driving their position.
However, when they’re bad they can be really destructive and in ensuring the lowest priced deal is done, fating the relationship with a terminal sickness that will ensure neither the client nor the agency get what they want. Ultimately, this delivers the worst possible business result for all parties.
I haven’t noticed their presence really being a barrier to pitching. If anything, perhaps their zest for deals undermines the value of relationships and makes it easier to disentangle clients from their agencies.
Carl Grebert
Brand marketing director
Nike Pacific
My initial reaction is that it’s very lazy marketing, especially if procurement departments are the sole judges of [which agency you appoint]. Your agency relationship is the single most important business relationship.
When we had a pitch [last year] we didn’t even talk dollars until we decided on the agency we wanted to partner with.
Your marketing manager and department should have enough business acumen to do the right deal. Money forms part of the review process, but it’s not the lead concern.
For us [appointing an agency is all about] relationship first, strategy and creativity.
[Procurement departments can play a role in the pitching process], but it depends on the size of the business, they can certainly play a role when required, but you shouldn’t be doing a dumb financial deal.
You don’t want the agency to feel they are being pressured over money, you both have to feel energized about working on the brand and the agency has to feel valued for the work they are doing. It’s not like buying stationery.
Naseema Sparks
Managing director
M&C Saatchi Sydney
I think the use of procurement departments in terms of when there are multi-agencies in the process is inevitable because it is like comparing apples with apples on a cost base. But the marketing and management departments need to then take over the decision because it must also be of value to the company. It is about delivering value through ideas and that can only by judged by the marketing department and the management of the company. It is all about delivering better value and ideas and the cultural fit.
Genny Chambers
General manager
The Glasshouse
We believe that the involvement of procurement departments in agency pitching increases the opportunity to know what an agency is really all about. Value for money is a legitimate business issue that needs to be addressed in the pitching process. It should not, however, be the overriding issue.
Involving procurement ensures clarity around business relationships from the start of the partnership.
With “brand” now considered part of the corporate P&L as an asset, cost is just one of many important factors in a pitch. Important questions need to be answered. Do they understand my business? Can I work with them? Is the work effective? How do they put a value on an idea?
At the Commonwealth Bank, the procurement group, which oversees the establishment of all preferred supplier relationships, has genuinely been our partner in this process.
While we have opened up our business, they have done likewise and resulting solutions have driven the costs down significantly. These solutions simply would not have been possible in the traditional “us and them” relationship of standard agreements.
It does not sideline the relationship between the marketing department and the agency. Marketing directors need to be able to demonstrate that their agency partners offer the appropriate level of quality and service at the best value. Transparency creates real partnerships and builds trust.
Yes, it provides barriers to movements of accounts on the basis of someone’s whim or prior relationship with another agency. The choice of an agency partner is critical and to involve procurement reduces the emotional component of the decision.
Ben Coleman
Managing director
Lowe Hunt
In my experience the involvement of procurement departments in agency pitches does not significantly impact the pitch process. In instances where a procurement department has been involved, the decision to appoint an agency and the remuneration negotiations are still driven by senior marketing executives. Procurement has generally been used to ensure that a tender process is followed.
Dianne Davis
Principal
Davis & Associates Strategic Marketing
The involvement of the procurement department is becoming standard practice. It is something that has been happening in other areas for several years. It is being driven by two key drivers: cost, and corporate governance and due diligence.
But it would be asinine for any company to let the procurement department run the pitch process and I can’t imagine any organisation would allow the pitch to be run solely by procurement. It is being managed in a dual role with the marketing department working with procurement.
The [procurement] doesn’t know the criteria to look for in a pitch—things like the quality of the creative and so on.
The major implications for agencies is that their relationship marketing networking has to factor in that there will procurement decision makers as part of the pitch process. There will be questions as part of the tender document about issues such as quality assurance, corporate governance and risk management. There will be a strong focus on costs. Agencies will have to be more accountable for disbursements. Transparency and accountability will be key. Agencies will need to have people on board who understand the kind of information required and how it should be packaged.
