Steve Lightfoot, communications procurement manager at the WFA,
said, "Procurement is not going to go away. If agencies stick their
head in the sand about it, then procurement is going to walk all
over them. If you want to feel part of a client's business
objectives, you need to engage in procurement."
Marketers like Procter & Gamble and Unilever do it well,
according to Mr. Lightfoot, but many companies admit they still
have a lot to learn. Only 49% said their own procurement units are
knowledgeable about marketing. This is partly because the
discipline is still relatively new: Five years ago, half of WFA
marketers had procurement departments; now 95% do.
Mr. Lightfoot said, "We are keen to push forward the benefits of
what procurement can be, and we wanted to wade into the debate
because we have authority. It's not about cutting costs, it's about
maximizing value."
The WFA offers two important tips to help companies do
procurement well. The first is to hire people with marketer or
agency experience. "You can't buy what you don't know," he said.
"You can't expect someone to move from tin and steel into buying
advertising. Job specs are increasingly asking for agency or media
auditing backgrounds."
The second tip is to involve agencies early in the process. He
said, "Procurement has to be embraced by all parties, otherwise you
get a good cop/bad cop scenario between procurement and marketing.
You can't give [the agency] a carrot and then beat it over the head
with a stick."
Without naming names, Mr. Lightfoot offers a case study of a big
brewer who started off with a heavy-handed approach to procurement,
but has matured into a more-balanced perspective.
"They started out by relentlessly driving down costs," he said,
"but if you keep making savings you find that you end up with only
a few ads showing at 2 am. They realized you have to spend a
certain amount, and now they are thinking more strategically about
resources vs. savings. They have come to a full understanding of
what an extra 15% on the budget can achieve."
Hamish Pringle, director general of the Institute of
Practitioners in Advertising, has spoken out against the tyranny of procurement in
the past, but agrees that the discipline is evolving. He said,
"In the early days of the procurement assault -- and it was an
assault -- on the marketing citadel, there was an alarming tendency
for CMOs to lay down their arms and retreat to neutral ground,
leaving their agencies to negotiate the truce on unfavorable terms.
More recently the marketing people have reentered the fray,
realizing that they are the ultimate custodians of the brand, and
that they need to work closely with their colleagues in procurement
to achieve not just lowest price but best value."
The more sophisticated procurement departments understand that
their job is to not to over-complicate the process. Mr. Lightfoot
said, "I've seen some Excel spreadsheets with massive lists of
criteria for success, but procurement should be looking to simplify
and to find the right ways to reward agencies for good
performance."
Mr. Pringle added, "The more sophisticated companies are
structuring their performance incentive programs to include
marketing, procurement and agency to ensure they all have skin in
the game, and thus an aligned agenda."
Procurement can even help agencies improve internal processes,
such as helping them with the bidding process for suppliers such as
production companies, Mr. Lightfoot said. "Procurement can manage
the nuts and bolts, providing a structure and framework so that
marketing and agencies can get on with the best strategy and
creative."
Despite trumpeting the benefits of procurement, Mr. Lightfoot
admitted, "There's always a sense that procurement is just there to
look at costs, and agencies are looking to get extra. But when the
two are on opposite sides of the fence, the product can end up as
the gooseberry in the middle."
The WFA's membership includes major marketers such as McDonald's
Corp, Kellogg's, Coca-Cola Co., Unilever, Procter & Gamble,
Kraft Foods, Microsoft Corp., L'Oreal, and Nestle.