NEW YORK (AdAge.com) -- After years of complaining that clients' procurement departments have hurt the ad business by treating the buying of media and office supplies in much the same way, could agencies find in the recession a reason to add purchasing experts of their own?
One major agency group is trying it out. Just in time for this year's upfront negotiations -- where upward of 75% of TV ad time will be bought -- Omnicom Media Group is providing its negotiating unit, OPera USA, with professional procurement resources, including one former Colgate-Palmolive executive.
Calling it a strategic play that will bring a new dimension to the negotiating process, Page Thompson, CEO-North America of OMG, said two procurement executives will join OPera USA to assist OMG's agencies, which include OMD, PHD, M2M and Prometheus. The execs will help formulate negotiating strategies, including pricing and contractual terms, with vendors; measure the performance of the media buys; and assist in the management of vendor relationships.
Putting pressure on TV
Such a move could help Omnicom put even more downward pressure on a TV business that is already expected to be down by as much as 20% and fetch better deals for marketers.
While it's too soon to know what the impact will be, Mr. Thompson said the move will allow OMG to save money for its clients.
"Procurement will play a role in helping our negotiators figure out ways to save money on media spends," Mr Thompson said. "The rules are no longer the same, and procurement is becoming a bigger part of the process. Managing the investment costs that we oversee for all of our clients is the most important things we do and clearly this is an opportunity to change the rules of the game and bring a new dimension and perspective to our negotiating teams."
"In today's environment, procurement is increasingly at the top of our clients' agenda," Daryl Simm, CEO Omnicom Media Group Worldwide, said in a statement. "By adding procurement professionals to OPera, we'll not only do a better job of meeting client expectations, we'll be investing in our buying teams by providing them with the negotiating resources and training to keep them at the top of their game."
The two executives joining OPera USA are Craig Glaser, OMG's director of procurement, who will now assume additional responsibilities for procurement initiatives across local broadcast and print, and D.J. Martin, formerly Colgate-Palmolive North America's director of indirect procurement, who will oversee procurement initiatives across national broadcast TV. At Colgate he managed a team of 14 procurement professionals responsible for strategic sourcing of services, including media.
Mr. Thompson said they will help guide OMG agencies' negotiating teams "on how procurement would approach a specific situation and or how a client's procurement unit would perceive things" while applying some of the "procurement practices" they have utilized in the past to the negotiating process. They will also attend client meetings with the agencies, Mr. Thompson said.
OPera was first launched in OMG's Europe, Middle East and Africa region back in 2005 and has since been introduced in 18 other markets across the globe. OPera USA reports directly to Mr. Thompson. He said there are no immediate plans to bring any additional procurement people on board.