Does procurement stifle marketing creativity? (Part 2)

(Continued from yesterday - Alex Ranson has experience of both procurement and marketing and is currently MD at Specialmoves, an "interactive studio who create incredible experiences on mobile, web and in the real world". Alex spoke on this topic at a recent event hosted by procurement consulting firm 4C Associates.) 

Does procurement stifle marketing creativity (continued)?

Alex Ranson of Specialmoves

6)  Yes, procurement gets excited about pitch processes.  Too excited. There are pitch and repitch processes which take over a year to complete – with massive disruption and distraction (very little decent work actually gets done by anyone in the meantime) and seven figure costs on all sides. I was recently sent one project RFP where longer had been allocated for the pitch process than for actually doing the paid design work. So even if we won the pitch, we’d struggle to breakeven. I even know of agencies being forced to pay to participate in pitches – on top of the enormous investment they are already making in time and effort.    Is it any wonder that agencies, struggling with the huge costs of pitching, are tempted to claw money back by marking things up later on?

7)     Yes, I have a vested interest. 95% of marketing agencies are SMEs, and I run one of them.  I know that we – and a few others our size - are among the most nimble, flexible, creative and innovative in Europe.  But small companies like ours can’t afford to get involved in lengthy expensive RFPs and pitch processes.  Nor can we wait six months after starting work to be admitted onto the procurement system, receive a PO number and get paid.   Only big agency networks can afford to do that.  Incidentally, they also have massive overheads: swish offices, yachts at Cannes, away days in Beijing, execs flying first class everywhere.   Money that’s not being spent on creativity, innovation or marketing effectiveness….

8)     Ah yes. Did I mention agencies have ways of recovering money that procurement thinks it’s negotiated away? Classic #1: “The Tooth-Sucking Builder”. Otherwise known as announcing two thirds the way through a project that another £100k is needed if the client wants it delivered on time.  Used principally with highly promiscuous, nickel-and-diming clients the agency isn’t expecting to work with again anyway.

Classic #2: “The Small Portion Restaurant”.   Used when procurement starts picking ratecards apart upfront.  The agency might concede a 50% discount on its ratecard, but the number of hours it eventually takes to do future project will mysteriously double.   It’s close cousin of Classic #3: “The Imaginary Junior”. The agency will offer you very competitive rates on some roles, resulting in a 20% average discount and a very smug procurement person.  But if you ever look at timesheets later on, there won’t be many of those £50 hours for a junior developer showing up …  I’ve witnessed all kinds of tactics like these in my career, and my conclusion is that considerable creativity is being wasted in completely the wrong place.

9)     Yes, I know that by now every hackle on every Spend-Matters-reading marketing procurement manager will be standing on end.  But the painful fact is that standard procurement approaches to buying marketing services are not only hindering creativity, but are not even delivering improvement in value for money.   My prescription is simple.  If procurement managers want to make a difference in this sector they have two choices: 1) turn poacher: become marketing managers and get closer to the decisions about what needs to be bought or 2) become change managers.  Educate marketing teams about supplier relationship management and – with HR - set up new performance management targets that hold teams accountable for money spent on failed projects and pointless pitches.   And then let them get on with it.

Voices (6)

  1. George Aldridge:

    Good marketing procurement people will recognise talent. Bad Marketing Procurement people will recognise cost savings alone.

  2. Alexandra Ranson:

    hi RJ
    I’m glad you got to the end without punching anything! The Spend Matters Editor does like to leave things on a cliffhanger…

    It doesn’t sound like we disagree at all – except on who does what. Taking the three great examples you cite:
    i) where was the marketer in this conversation?! Sounds like a daft supplier but an even dafter client. Lucky for him/her to have a guardian angel with a modicum of common sense to remind him/her of the basics of the job (will the activity deliver the desired effect?) But I’d rather see numpties like that make mistakes, be held accountable, and be moved on if they are not up to the demands of the job: which MUST include achieving good ROI.
    ii) where was the legal department in this process??! How come marketers are allowed to issue and sign supplier contracts without legal involvement? Again, lucky you were there to clean up the mess but I’d like to see some marketers and in house counsel taking some responsibility.
    iii) The almost complete lack of care and transparency related to third party costs is something that the marketing industry desperately needs to address. Procurement definitely has a role to play in sorting this out – abuses are so widespread that it’s a major change project. But once sensible processes and accountability procedures are set up, I’d argue marketers need to start taking some responsibility for managing their budgets – not just direct spend but indirect too. It all affects ROI.

    1. RJ:

      Hi Alex, this is turning into more of a 3 pints debate now than a real argument as we do agree on 99% of what needs to be done.

      However, the point I was trying to make is that in very generalistic and stereotypical terms, marketing people are recruited to provide creative communication skills, while procurement teams should be filled with strong negotiators with an eye for commercial analysis. We all know of some great individuals on both sides of this fence who possess more than adequate doses of both skillsets to do a grand job on their own. However, particularly in larger organisations, it usually makes sound business sense to employ teams with complementary roles.

      All this comes with the caveat, though, that I agree wholeheartedly that a “traditional” procurement approach to buying marketing services will completely knock the stuffing out of any innovative approaches or relationship-building.

      1. Alexandra Ranson:

        Maybe I just have a foolishly naive view of the world that senior marketing people on six figure salaries with 15-20 years of experience should be able to recognise creativity AND possess relationship management, analytic and commercial skills. But I went to b-school in the US, where they knock a lot of that kind of thing into you, if you hadn’t already learnt it along the way. Perhaps we should do the same in the this country.

  3. RJ:

    Alex, I’m pleased I forced myself to get to the end of your two articles before reacting in a knee jerk way to the earlier content. Very provocative to a procurement audience but also perceptive in the way too many procurement exercises are run. In conclusion, I totally agree with your final two points… but not necessarily with the final sentence.

    Firstly, on the points I agree with: if Procurement teams want to be taken seriously in dealing with Marketing spend and teams then they have to understand that value is not driven by cost reduction alone. The availability and release of creativity and innovation are often driven by relationships and certainly are stifled by heavy-handed buyers wanting to haggle over rate cards which, as you so clearly point out, is counter-productive in any case. Developing SRM and working with other teams to identify how “value” is defined and measured are definitely keys to unlocking marketing suppliers’ true potential.

    However, I think there are at least three other ways in which good Procurement practice can support marketeers:
    (i) (often combined with Finance’s role) acting as a check and balance on the wildest excesses of marketing’s creative streak – e.g. I once challenged an over-enthusiastic supplier on the merits of a triangular mailshot that would undoubtedly have been interesting but which would also have been easily damaged, massively costly to produce, fulfil and mail and would have probably been recognised as such by the consumer and therefore had the opposite effect to the one intended;
    (ii) don’t under-estimate the risk management component. I’ve lost count of the times I have seen buyers dig marketeers out of contractual holes such as the time when our most profitable product was threatened by administrators of a bankrupt supplier who owned the critical intellectual property rights that an over-enthusiastic marketeer had signed over to them; and
    (iii) while Procurement teams do often fail to recognise the value (and cost) of creativity, that doesn’t mean we shouldn’t challenge some of the other costs involved in marketing. I have seen too many rip-off proposals including tied in sub-contract costs, ridiculous expense claims (e.g. the photographer who insisted that a photo of a mocked-up deckchair could only possibly be taken on a beach in Antigua) and over-inflated allocations of hours to place my trust in all providers and the vested interests of the marketeer.

    Let’s not forget that marketing awards and dazzling creativity do not in themselves sell product. Just as with many other “special” areas such as consultancy, legal and research and design, Procurement teams need to tread carefully but can add an extra dimension and challenge to their technical counterparts.

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