Why Is Procurement Necessary?

procurement-whatfor The incursion of procurement on the marketing organization has caused no shortage of pain at agencies — and some startups as well. Among the concerns are that creative process will be devalued, client services squeezed, and strategic account planning shrunk to a line item by procurement agents who may lack marketing experience.

But procurement exists for a reason, right?

To better understand what role it plays in the marketing process, we asked two agency leaders and one platform exec this question: “Why is procurement necessary?”

Click below or scroll for their answers.

Matt Seiler, CEO, IPG Mediabrands

“I usually say that I’m the poster child for procurement. That’s because I’m woefully tired of my peer group complaining that they have been commoditized by procurement and by the procurement process. In fact, it is not procurement that has commoditized us; but that we have commoditized ourselves. Procurement officers can be tremendous advocates for our industry and the work we do, if they see and understand the value in what we bring to the table. If you can’t prove your value, you’re at risk, and you deserve to be commoditized.

With procurement, it’s important to remember that there are a lot of things we do at agencies that don’t always make sense to third parties, but that are designed to help a client achieve their marketing goals. In order to work successfully with procurement, you have to understand what success looks like for them; their KPI’s are not necessarily the same as those for the marketing team. For example, it’s incumbent upon us, as an extension of a client’s marketing department, to explain why we are recommending a certain number of people be assigned to a client’s business, or why high value programming like the Super Bowl or the Oscars is worth the premium. We should be confident enough to explain this, and to explain how what we do is of value. Thankfully, gone are the days of agencies accepting the old adage about not knowing which half of your advertising works. Today, we have sophisticated tools and the talent that can prove what works, to what extent, and why it matters.”

Alan Wexler, EVP, North America & Europe, SapientNitro

“Yes, procurement has an important role to play but needs to evolve. Senior marketers are under increasing scrutiny to demonstrate a direct link with business results and ROI. Yet too many marketing and brand decisions are based on emotion and subjective, creatively-driven responses.

As technology plays a bigger role in marketing decisions, and marketing programs (especially digital) become more measurable, procurement can play an integral role in adding structure and accountability to marketing decisions. Emotions will always come into play but procurement can play a valuable role as third party arbiter to help balance the inevitable emotion with an eye on performance. This skill becomes even more important as CMOs and CIOs increasingly sit at the same table.

If procurement managers are focused exclusively on price, they are probably not making decisions in the best interest of the company. Procurement needs to evolve from being a price-focused decision to a value-focused decision. By doing so, procurement has the opportunity to raise the bar for the industry by adding structure and accountability to the equation. They have the power to hold market buyers accountable for business success and for compensating agencies for their ability to deliver quantifiable results. If they embrace this challenge, procurement can evolve from the dreaded line-item cost cutter to a strategic decision maker.”

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James Gross, Co-founder, Percolate

“Procurement is the investigative layer that takes the workload off the buyer when making a purchasing decision. In most cases, the buyer doesn’t have the perfect amount of information to make the appropriate decision for the specific product or service that is being evaluated. This often happens inside large organizations and creates a need for a specialized role that goes beyond procurement’s perceived job; use the collective buying power of the organization to get the lowest possible price. Procurement can satisfy this need by collecting data and understanding issues like the cost-benefit analysis and risk profile of the organization they are looking to partner with, but as access to previously held private information becomes more readily available and public on the internet, their role could become less relevant.”

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