Can common goals help agencies and marketing procurement build long standing relationships?
In December 2015, a radical announcement by a major FMCG client sparked debate about the future role and value of marketing procurement. In the press furore that has reigned, there has been much controversy over the sustainability of the procurement function, at a time when the global marketing industry is questioning the agency one-stop shop, retainers, time-based fees and reducing three-month pitch windows.
To restore calm and collaboration, ISBA’s COMPAG Group, a specialist marketing procurement community group, brought together COMPAG members, global marketing agency heads and consultants for an exploration of the key issues.
Here’s a summary of the key issues discussed.
Should a global marketing agency request the involvement of procurement from the outset?
It may sound ludicrous for a marketing agency to request the presence of a stakeholder so often seen as an adversary, however, procurement claim their presence will bring multiple benefits to the pitch process, particularly as they come across many marketers who have never run a pitch before. For this reason, and many others, procurement can:
1. Ensure a level playing field. They can bring professionalism, integrity and help to avoid bad practices, such as adding marketing agencies to make up the numbers.
2. Align objectives with the marketing department. This is an issue that causes pain for both procurement and agencies. It’s a tough task, however, procurement needs to interrogate the brief provided by marketing, and align objectives, before inviting tenders.
3. Form an earlier, stronger relationship with an agency. This relationship can later help the successful marketing agency with POs and getting paid. It was noted that currently, very few agencies have procurement relationships.
By involving procurement early within the pitch process an agency can also avoid the pain associated with them being invited (or forcing their way in) at a later stage. It could help to avoid lengthening the process, changing objectives and / or evaluation criteria, etc.
Is the decision to pitch a risk worth taking?
Agencies will need to make a decision on whether to pitch or not. They will need to ask themselves:
|•||Who are we competing with?|
|•||Can we win? What are our chances?|
|•||Is the risk affordable / worth it?|
Marketing and procurement should be willing to confirm the:
|•||Reasons the incumbent is under review|
|•||Size of the prize|
It can cost a lot of money to pitch, so for some marketing agency leaders they want to know the size of the prize and the likely relationship length first. Some were keen on an upfront two or three year contract. Others pointed out that even if a five year contract was to be awarded it would typically be accompanied by a three month notice period. Everyone agreed that to avoid an early end to a new agency-client partnership performance is key, irrespective of contract length.
When should marketing agencies exit the pitch process?
There is universal agreement that there should be multiple opportunities for an agency to exit the pitch process. The costs of running a pitch can be expensive. Therefore, once an agency feels it cannot win the pitch, the sooner it can walk away, or be advised to, the better it is for all parties.
How can both parties help to improve their relationship with each other?
Procurement is often frustrated with agency leaders’ lack of commercial awareness, feeling they should better understand their own operational and financial metrics. In some cases marketing agencies have won pitches only to realise the size of the prize was not worth the effort, or that they are not confident they will return adequate margins.
Agencies have two main concerns.
Firstly, whilst some procurement professionals were open to fully transparent pitch criteria, others were strongly opposed to it, leaving some agency leaders perplexed. Procurement say that it’s often so difficult to agree evaluation criteria across different stakeholders that they do not wish to share it in advance - or be drawn into discussions with agencies about it. Additionally, if pitch scoring is close, chemistry will likely be weighted higher, and often become the deciding factor.
Secondly, procurement remain constrained by their paymasters, who still see cost reduction as the primary objective.
There are areas for joint improvement.
There is a higher chance of failure where there is a lack of empathy with other stakeholders, often as a result of inexperience within pitch processes. Understanding each other’s pain points can help to improve empathy. This was one of the objectives ISBA’s COMPAG Group sought to address at the event.
Furthermore, all parties rarely discuss ROI, which is something that could be beneficial to all.
What of the future?
Whilst it may be true that agencies and procurement share some common goals, such as impressing the marketing department and striving for a level playing field for pitches, concerns over the transparency of evaluation criteria and the overall objective to reduce costs means these long standing adversaries have much work to do before they can form long standing relationships. Exploring ROI could become another key common goal that helps to achieve this.
ABOUT THE AUTHOR
John joined Freedman in 2015. He has responsibility for the global marketing plan, team and technologies. He brings 15 years’ experience in delivering high performance marketing programmes and business growth within complex global organisations across the Energy, Professional Services, Financial Services, ICT, Retail and Property sectors. John is a Chartered B2B Marketing Leader with Diplomas from the Chartered Institute of Marketing and the Institute of Direct and Digital Marketing. He loves a holiday and includes Barbados, Hawaii, Australia, Venice and anywhere in France among his favourite destinations.
In December 2015, a radical announcement by a major FMCG client sparked debate about the future role and value of marketing procurement.In the press furore that has reigned, there has been much controversy over the sustainability of procurement. …