Woolley Marketing: Is procurement the villain or the patsy?

Hands up: who likes procurement?

Ask most agency people and they will have a poor opinion of marketing procurement. The very enquiry as to the likeability of the procurement profession will illicit stories, often horror stories, of behaviours that feel uncaring and sometimes downright nasty.

But spend time with any procurement person and you will find a professional who is diligent, often analytical and typically curious of the business processes and models of their suppliers and vendors.

Is this simply a clash of cultures? The more relationship focused marketing and advertising culture, who spurn rigid process for the exhilaration of creativity clashing with the analytical and process driven approach demanding due diligence and governance. It is not that simple.

Superficially both procurement and advertising agency will say they agree on the objective, which is to choose and appoint the right vendor (agency) for the marketing task at hand at a sustainable fee and with a contractual agreement to protect the interests of all parties.

Illustration by Dennis Flad

From this point on the alignment between the two is lost. But let’s examine when this misalignment is the most telling—the agency pitch or tender process. Even the words used to describe it reveals the difference in approaches. Agencies are ready and willing to pitch their ideas. While procurement is inviting them to tender for the contract with processes abbreviated to RFP, RFT, RFI, RFQ and more. All requests to participate.

The agency has very clear objectives from this process—they want to win. Winning means getting the business and agreeing an amount that is sustainable and hopefully profitable.

But a winning outcome for procurement is a little more complicated. Legal wants the tender managed to minimise the risk associated with the vendor. Finance wants the contract value (read agency fee) to be ten percent less than the last contract. Corporate communications want the whole thing done without attracting the interest of the media. And Marketing wants the best agency at the lowest price.

This is why the tender sometimes has a 180-page draft services agreement contract (with addendums) for the agency to review, along with the pages of questions in the Excel attachment on the agency corporate structure, insurance and legal history. It is there, not to waste the agencies’ time, but to help assess legal risk.

Finance wants procurement to reduce operating cost. Often marketing procurement teams in major brand marketing organisations have a KPI to reduce the advertising contract value by a minimum of ten percent, which makes a mockery of the belief that procurement is somehow transforming from cost reduction to value creation. How do they do this? By having the agencies compete on price and finding or creating benchmarks that justify their preferred negotiation position.

Corporate communications is hoping that the legal teams have gagged everyone involved with non-disclosure agreements based on corporate confidentiality, but secretly know that one or more of those involved will leak it to trade media, creating a minor crisis they will be able to dive into and solve. And if it does leak, that is fine too, as they are too busy and too important to be worrying about marketing issues.

Then finally there are the marketers. Sometimes they are the reason for the tender process. Other times they are told to review their agencies. But no matter, the process is one where the agencies work to woo the marketers, and the marketers work to get what they want—the best agency team at the lowest possible price.

Of course, the marketers will never say that to the agencies. That is what procurement is there to do. And procurement is incentivised because their ability to reduce marketing cost is a measure of their efficacy. And in some cases, to keep their jobs.

So, the next time you have a less-than-optimal interaction with a procurement professional, I encourage you to consider which string is being pulled and provide some empathy and understanding.

Unless of course they are ghosting you, disrespecting you, or lying to you. Because that is just plain villainous.

Woolley Marketing is a monthly column for Campaign Asia-Pacific, penned by Darren Woolley, the founder and global CEO of Trinity P3. The 'Procurement Performance' illustration accompanying this piece is by Dennis Flad, a Zurich-based marketing and advertising veteran.