Picture: ISTOCK
Picture: ISTOCK

Understanding how procurement works can help agencies secure more clients, says Scopen Africa. This is according to the research company’s Agency Scope 2017/2018 report, which indicates that 54% of advertising and media agency negotiation processes are led by marketing departments, while in 41% of those processes marketing and procurement departments are present. The study also found that 63.7% of marketers are influenced by an agency’s offering and 36.3% make their final decision based on the agency’s costs – which is why the procurement department needs to be involved.

Procurement departments, with their focus on selecting suppliers that are viable and have sustainable business models and good track records, need to be taken seriously by agencies, says Johanna McDowell, partner at Scopen Africa and CEO of the Independent Agency Search & Selection Company.

“Being in direct contact with a company’s procurement department when looking for business opportunities is therefore a good idea,” she says.

The big take-out

Because procurement departments are becoming more involved in the agency selection process, advertising agencies should work to develop relationships with them.

Procurement departments are still relatively new in SA, only really coming to the fore in the past five years. But despite the increasing importance of these departments, agencies still contact them less than they do marketing departments, says McDowell.  For example, where a marketing department might have received as many as 27 cold calls from different agencies in 2017, procurement would have received only six.

“Unfortunately, agencies and marketers seem to misunderstand procurement’s role and what it does,” says McDowell. “Though it has been part of government departments for many years, it’s still a relatively new department in many corporate organisations. Of the 217 marketers who were interviewed in the 2017/2018 study, only 11% don’t have a procurement department.”

From a new business perspective, she says, this creates an opportunity for agencies: procurement departments know exactly what marketing departments need and can offer agencies a route into marketing departments, which then have to abide by procurement rules when it comes to bringing new suppliers on board.

It can take up to three months for a new supplier or agency to be included on a vendor database of a larger company because of the rigorous internal processes that must be completed. For that reason, says McDowell, agencies that form early relationships with procurement departments will tend to have the upper hand.

Agencies are advised not to bypass procurement. Not only does it play an important role in supplier negotiations, “but it also ultimately has a serious role to play in the final decision made by marketers when selecting an agency”, says McDowell.