Procurement Issues Still Driving A Wedge Between Agencies And Clients

Procurement pushed itself well up the agenda at C Squared’s Venice Media Festival – even though many expressed a desire to accept it and just get on.

A breakout session devoted to the subject saw ten brief conclusions provided by Douglas McArthur OBE, Planning for Results, to a report commissioned by DDS. Points included:

“Sarbannes-Oxley is like washing your face with boxing gloves – it does the job, but clumsily.”

“Procurement is maturing and becoming more professional.”

“There is still no common understanding of what is meant by savings – is it the return of cash or is it getting more for the same money?”

“Procurement people use trade bodies, but agencies can’t or won’t share best practice.”

“Procurement is an unstoppable trend.”

Delegates heard from Richard Woodford, global procurement EMEA, Merck, Sharp and Dohme, and Anne Spilsbury, head of Marcomms procurement, Xchanging, who emphasised the guidelines and the pitching and briefing documentation that exist now (via ISBA), and suggested that the agency/procurement relationship was improving significantly. Woodford did suggest that agencies get “commercial, savvy finance people in front of us” not account directors (who don’t understand procurement practices).

However fellow panellist Stephen White, chairman, EMM International, was less positive – “marketing and procurement people don’t like each other,” and, from the audience, retired auditor John Billett described Woodford as operating in another world… it was “reality v nirvana.” From the audience and from Billett came further evidence of how common it is for advertisers to share proposed agency fees with other pitching agencies, despite this being against ISBA guidelines.

Woodford, who seemed genuinely shocked by this, promised his ISBA procurement group would investigate further.

So, the scene set, procurement was hardly going to be swept under the carpet amongst the agency CEO panel the next day. Whilst for some it was just a fact of the business now, for others it was part of a pricing mechanism for buying which was holding back the agencies’ opportunity to invest further in talent and technology and tool up to deliver more creative executions and big ideas for clients.

Alexander Schmidt-Vogel, CEO Mediacom Worldwide, was particularly vocal in a plea for clients to pay fairly for ideas that went beyond the standard media buying brief, whilst also suggesting agencies must learn to react to procurement-driven margins and “say no sometimes”.

Steve King, worldwide CEO Zenith Media, also joined the debate, describing “the mismatch between client payment and client requirements”.