Procurement's growing role in marketing
The procurement department is playing an increasingly significant role in negotiation between marketers and their agencies. This is unlikely to change in the foreseeable future; in fact, if anything, the department’s role is set to become even more important.
According to research findings from Scopen Africa (a local division of the Spain-based agency Scopen) in 51% of negotiations with agencies the procurement department is involved jointly with marketing in the negotiation process, says Johanna McDowell, managing director of the Independent Agency Search & Selection Company (IAS), and co-owner of Scopen Africa.
“It’s not hard to see why procurement has become increasingly involved in pitches, contact negotiations and vendor management, considering legislation and BEE requirements. Procurement’s involvement is a legal requirement for government contracts, and advisable for large corporates,” says McDowell.
Given that sustainability is a priority for most organisations at present, it’s no longer possible to choose suppliers based only on price, but rather on whether they are viable, sustainable concerns.
In this landscape, McDowell believes agencies have too little direct contact with procurement, something she advises them to change. “Marketing cannot make any decisions without approval from procurement. The procurement department needs to assess agencies in terms of the vendors they already work with to ensure there is no duplication and all criteria for vendors are met.”
Agencies make one-third fewer cold calls to procurement departments than they do to marketing departments, points out McDowell. “It makes sense to meet the procurement department and personally introduce one’s agency and credentials, as opposed to merely sending them through,” she says.
One of the reasons agencies are reluctant to make contact with procurement separately is that they are wary of stepping on the toes of their potential clients in marketing, or want to avoid involvement in the politics that goes on between the two. “My view is that agencies should worry less about this. In fact, the agency could play a key role in getting marketing and procurement to each understand how the other operates.”
As marketing in SA becomes more sophisticated and more spend is allocated to it, McDowell maintains that procurement’s role in the process will only grow bigger. It plays an important part in corporate governance, which guards against some of the more nefarious activities taking place in organisations today, she says. Agencies that work together with procurement will find that the department can in fact be their biggest ally, helping them to understand what is needed and allowing them to align their offering with those needs.
McDowell’s advice to agencies is to do their homework in terms of understanding the role of procurement in their clients’ and potential clients’ businesses, and to become comfortable with making contact with them directly during the pitch process. Procurement, she says, will increasingly be running the pitch.
Scopen is working on the second edition of the research, which provides insights into trends in the SA communications industry.
The big take-out: Johanna McDowell of IAS and Scopen says procurement’s role in pitches and contract negotiations is already important, and on the increase. Agencies need to become comfortable with making contact with the procurement department separately from marketing.