Agencies sceptical about role of procurement

22 June 2010

NEW YORK: Advertising agencies remain highly sceptical about the increasingly central role that procurement departments are playing in clients' marketing decisions, a new study has found.

The Association of National Advertisers, the trade body, surveyed 225 executives, of which 90 were from agencies, 76 from procurement teams and 59 were from a marketing background.

Overall, 84% of participants who were responsible for procurement stated that their key objective when it came to marketing was getting the strongest results from their company's expenditure.

However, this view was contested by the 74% of agency respondents who believed cutting expenditure was the primary aim of their clients' procurement operations.

These differences extended to the interaction between these two groups, with 94% of contributors focused on procurement arguing they had built good relationships with agencies.

However, only 66% of those polled from agencies were of the same opinion, and just 29% thought procurement units were open and up-front in their discussions with marketers and their creative, media and digital shops.

Similarly, 51% of marketing professionals agreed their counterparts in procurement lacked an in-depth understanding of the communications market, while 46% asserted they were not always honest with agencies.

Elsewhere, a 14% minority of the agency panel said procurement officials were "knowledgeable in advertising/marketing."

In all, 38% of procurement staff had worked in marketing or agency positions before taking up their current role, with 43% coming from other procurement functions, 5% from finance and 13% from jobs outside of the marketing sphere.

"I think we're surprised by the wide gaps between procurement and agencies," said Bill Duggan, group executive vice president of the ANA.

"It's a surprise and, quite frankly, it's a little disappointing because we haven't made much progress."

Among the best practice guidelines put forward by the ANA were establishing common goals and reaching a shared definition of what constitutes "value".

Moreover, it suggested that representatives from procurement departments should seek to gain an insight into all aspects of the agency business, including cost structures.

"You never want to pursue a goal that will surprise your marketing partners. The process has to be about driving value and recognising that agencies are in the market for the same things as you," Chris Baker, senior director, purchasing, for Heineken US.

"I don't think you have to have been a former marketer to be good at marketing procurement. But you absolutely have to have the same passion for your brands as they do."

Data sourced from AdAge; additional content by Warc staff