Task Force Out to Prove Procurement's No Villain
NEW YORK (AdAge.com) -- Get over it.
That's the advice J&J senior executive Brian Perkins gave the industry when the subject of procurement reared its head at the Association of National Advertisers' conference last month. His point is well taken; procurement executives aren't going to vanish.
But maybe their image can be raised. At least that's the goal of a new procurement task force set up under the Association of National Advertisers that includes high-powered executives from IBM, Johnson & Johnson, Toyota, Anheuser-Busch and more: to repair the widespread misalignment between procurement executives and their internal and external marketing partners.
It's no small task. To merely get over it -- the "it" being the feeling that procurement has historically had little interest in buying creativity or strategy -- is easier said than done. Especially considering it's not just agencies decrying procurement anymore. In fact, an ANA study this summer found not only a wide disparity between how procurement officers and agencies view how well procurement is doing its job, but a significant perception gap among marketers as well. Only 49% of marketing executives thought their own procurement units were knowledgeable about marketing.
"Agencies and procurement look at things diametrically opposed, but the surprise was that marketing -- which a lot of us assumed was in the corner of procurement -- is sort of in between right now," said Avi Dan, founder and president of New York-based consulting firm Avidan Strategies. "They aren't condemning procurement, but my sense is marketing departments are becoming a bit concerned that too much is being cut out of fees."
Although tensions have been steadily mounting, there's been little in the way of formal moves by the industry to address the problem, until now. "Based on the results of the survey, it's clear that some marketing procurement colleagues are having more success than others," the committee co-chair, James Akers, senior director-worldwide procurement, global category, lead, commercialization and communications at Pfizer, told Ad Age. "The overall goal is that everyone who works in marketing procurement becomes as smart as possible about the marketing space and adds value to their companies."
The task force recently held its first meeting, during which it assembled an impressive group of top officers to comprise a new procurement mentoring program. That is the first priority, but there is also a secondary goal of the Procurement Task Force to address education in the procurement marketing field more broadly, perhaps through a formal curriculum. There is also an effort to address branding and public relations in the field, and to create a white paper that defines the role of marketing procurement.
How will the mentoring program work? Each of the individuals can be called upon to provide one-on-one counsel to people who have held procurement roles but never have been involved in the process of how companies purchase marketing services. Said Mr. Akers: "If you apply supply-side approaches, it's not going to work. There needs to be a change."
While procurement has been around for awhile, most in the industry estimate that its entry into the world of marketing dates back only about a decade. In many instances, companies moved procurers from other departments into the field who are not necessarily marketing experts. The hope of the task force is to help officers at least understand the language of marketing and understand how to communicate with people in that department. "I know procurement people who understand marketing, so it's a generalization to say none do, but there are some that don't understand it," Mr. Dan said.
In the opinion of industry executives, the program could help fuel some positive changes in the conversation that are already taking place. In the past, said Susan Giannino, chairman-CEO of Publicis USA, "[procurement officers] challenged our numbers, the cost of our people. They even -- and these are procurement people who have never worked with an agency -- would tell us that it was too many people for that scope [of work] or too many account people vs. creative. How would they know?"
"It was like being litigated," Ms. Giannino said. "I won't say that it's not like that ever anymore, but it's not like that as much. ... More and more these days, not all of the procurement discussion starts with cost or an antagonistic challenge about how the agency makes money."
"Some procurement officers are getting smarter at understanding that buying advertising services isn't the same as buying other commoditized things," said Andrew Benett, Worldwide CEO at Arnold Worldwide. "Good procurement folks on the client side are being more strategic, and you're seeing that with them being more open to some innovative compensation schemes. One of the best things I ever heard from a client about agency remuneration was 'We want to be the most profitable account in your agency because we want to be the most valued.' But sometimes, you have procurement at odds, wanting it to be the least-profitable contract in the agency, because that's how they are evaluated."
And pretty much all parties agree something needs to be done. "It is absolutely about time for procurement to begin to see themselves as not just a way to reduce money, but to get more value," Ms. Giannino said. "I totally applaud the effort of procurement to evolve their role, to find out how they contribute to helping the advertisers get the agencies to create the most value for them.
"We're not there yet," conceded Arnold's Mr. Benett. But "we are moving to a place where what we're brokering is not a transition, it's a relationship. I think in a couple of years, we'll have a different landscape."
DON'T GET OVER IT, GET WITH IT
Among those participating in ANA's procurement task force:
Lisa Figel, group category manager-U.S. agency procurement, J &J
Tracy Allery, category director-procurement, relationship marketing, digital, consumer planning, Diageo
John Cirigliano, senior procurement manager, IBM
Brett Colbert, global manager-advertising, A-B InBev
Jeff Devon, director-global marketing, HP
Michael Howerton, global procurement service, Cisco
Antonio Humphreys, strategic sourcing-marketing services, Gap
Ron Jensen, national manager-financial synergies, Toyota
George Roumanis, agency management team, IBM
Sopan Shah, purchasing manager-media & advertising, Nestl? Business Services
Donna Stamp, marketing procurement director, Enterprise Holdings