What is it About Procurement That Ad Agencies Dislike?

18 Dec

agency client procurement relationshipBriefly, it appeared as though Strategic Sourcing, client-side Marketing and Agency professionals were engaged in constructive dialogue regarding procurement’s role in the marketing services arena.  That is until representatives from the ad agency community took to their soap boxes and railed against corporate procurement’s role.

Why do certain agency community representatives continue to wage a public battle to minimize or eliminate the influence of procurement in the agency sourcing process?  Perhaps one has to move beyond the seemingly endless diatribe about procurement’s “lack of understanding” of how to value an agency’s contribution or the intangible nature of agency deliverables on brand health or procurement’s role in driving agency margins down to get to the root cause of their concern.

After all, forging strong alliances with Strategic Sourcing professionals represents an opportunity for agencies and should be a cornerstone of their business development and client retention strategies.  Could it be that some within the agency community are fearful of the financial scrutiny and performance benchmarking that are part of the process?  Perhaps they are not comfortable justifying fees and or offering demonstrable proof that their stewardship of their clients’ advertising investments generated a positive economic impact.

If their concerns are grounded in the former line of thinking that ship has left the pier and those arguments no longer hold water. Company Boards of Directors and Senior Management teams have both mandated Strategic Sourcing’s involvement on an enterprise-wide basis and expanded their near-term charter to include marketing services.  If the concern is related to the difficulty in valuing their contributions there are two economic analyses that are required.

The first is certainly well within an agency’s ability to catalog, monetize and communicate… their investment of resources into stewarding their clients advertising investments.  The second may require more work, particularly if the client-side marketing team and the agency have not implemented a sound return-on-marketing-investment monitoring system to accurately track and attribute their in-market results back to each facet of the client’s marketing investment.  Difficult as that may be, a fact-based, rational construct is the best bet for engaging all parties in a productive discussion regarding agency performance and contributions and for positively impacting the procurement process.

For many organizations the investment in marketing and advertising is one of their largest indirect expenses… it will continue to be scrutinized. Interested in reading more? Attached is a fascinating exchange between individuals with slightly different perspectives … Read More.

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