The following comments are in response to the AdAge Article titled, “Fed Up Shops Pitch a Fit at Procurement”

Procurement departments vary, and talent within those departments varies,
just like it does with clients and agency staff in general. Some procurement
execs we’ve worked with truly understand that people are not parts. You pay
less for parts, you get the same parts. You pay less for people, and you get
fewer of them, or less of their time, or less creative and experienced ones.

The single most challenging issue on the table is that neither procurement,
nor most clients, nor most agency pitch teams can deal well with the issue
of causality. Many things outside of an agency’s control impact market
success, making it nearly impossible to isolate the value of their
contribution from the rest of the players on the field.

The ROI on agency cost is impacted drastically by:

1. Product quality: It’s easier to sell superior product, tougher to sell a
commodity product, and damn difficult to drive up ROI for a brand that is
struggling. Procurement must make sure where the brand or product stands
relative to demands on agency performance.

2. Competitive and environmental changes: Will procurement track competitive
pressure, or changes in the marketplace? Will the company cut agencies slack
if, for instance, a major competitor comes out with a breakthrough product
that gets massive press and run-away sales? What happens if the the national
economy takes off and all boats are rising? Should the agency be compensated
for being lucky enough to be on board when the entire sector is growing in
the double digits?

Lastly, and this is the tough one for procurement departments and client
leaders: GIGO. Garbage In = Garbage Out. How solid is the client-side of the
relationship? How high is turnover there? How experienced are the clients
managing the work? How consistent is their direction? These are the areas
that Agencies can legitimately push back on. Agencies can be stubborn and
“not cave.” It might be much more productive to ask for client-side
assurances that they will do their part well. If they commit, perhaps
agencies CAN do it for less, and without complaint.

We are client-input analysts, and we see vast difference in the quality of
RFPs and briefs agencies receive. As one of our clients remarked recently,
“Agencies lose money on badly briefed projects and make money on
well-briefed projects. It is in everyone’s interest for us (clients) to take
responsibility for improving our input.” If you’ve got that kind of client,
you can have more faith in your ability to meet procurement’s demands.

The answer for procurement is NOT to expect that agencies can be fully
accountable for outcomes in a vacuum. The FIRST place to look for efficiency
is on the input side. You can expect more from your agency; more success,
more accountability, more creativity, more support, better service. You can
expect the work to be more effective, but not if you focus only on the
agency-side of the equation.

Negotiate hard, but only when you know you have your act together.