This article is by Michael Lee, founder of agency-search consultancy Madam.
Usually around this time of year, I would find myself on the Croisette at the Cannes Lions International Festival of Creativity. Soaking up both sun and shortlists, attending a seminar or two, discussing where ad agencies get it all wrong and clients got it half right, and occasionally supping Domaine Ott on the Carlton Terrace or a pint at the Gutter Bar.
This year I decided to invest my pennies very differently. I took a flight in a completely different direction. Go West, young grasshopper. Madam went to Phoenix.
To be precise: the ANA Advertising Financial Management Conference in Scottsdale Arizona. Two and half days spent in the company of hundreds of the wrath of ad agencies…procurement people.
Porquoi, you ask? Why would an executive creative director wish to put himself through such torture? Well, it was described to me as “the one to go to” by a number of colleagues and “this is where the action really is” by another.
To the belly of the beast, according to many agencies.
OK. So what was on the menu?
Well, yes, there was stuff like “best negotiating practices” (thumbscrews or hot pokers), how to get lower costs and higher ROI, and what’s next in agency compensation. McKinsey were there asking whether clients wanted to save 20% in agency costs (they needed to ask?). All rather dry stuff.
But slowly, I became somewhat encouraged with some of the people who spoke and the comments they made. People like Sopan Shah of Nestle, saying the job can’t be all about the money, getting something for less and being rewarded for that.
Or Connie Mossop of Bristol Myers Squibb talking about the importance of building relationships and that procurement needs to be a safe place for agencies to come to with their issues.
Or Gerry Preece of External View, giving one of the best presentations of the conference saying that procurement needs a name change: They’re not procuring anything, they’re protecting an investment. All very promising.
But I was beginning to think that it’s not easy being a procurement person. Agencies are very wary of them, and they’ve got problems back at the ranch within their own company. I doubt they’re the most popular crew at the office Christmas party.
“Marketing leaders and traditional procurement don’t always see eye-to-eye on how to set the right agency compensation or how to measure agency value,” wrote Bruno Gralpois, head of global marketing services at Visa V -0.82%, outlining in his excellent new book Agency Mania. “Not everyone in procurement is sensitive..to the insight and value of a top-notch account planner.”
I needed some one-on-one time on this, so I sat down with Brett Colbert, someone who obviously knows what he’s doing and has thoughts on what needs to be done.
“Firstly it’s ridiculous to call it procurement…it can’t just be about procuring or buying, I prefer it to be called strategic sourcing, because that’s what it needs to do. We have to move the conversation beyond savings, talk about value not price.“
Brett continued, “Agencies need to be encouraged. Why not evaluate agencies by identifying and rewarding agency innovation? Looking for more for more, not less for less?”
He was warming up. “And please let’s end the working budget v non working budget conversation….everything is working if it’s done right.”
Bravo on that one.
“I live by value creation, but marketing procurement still are focused on reducing costs.”
That’s the issue then. But maybe can they change.
“Lets hope so…I’m trying.”
I like that man and the way he thinks. There’s a job to do. And like most jobs, there’s a smart way to do it and a dumb way to do it.
On a more entertaining note, Miles Nadal of MDC Partners was in a feisty mood and had the best line of the conference when he reminded agencies that “clients come with a check, not a gun” and encouraged them to “stop whining.”
But back to the issue.
If procurement–or strategic sourcing, as I’m now going to refer to it–is here to stay, and it is, it needs to adjust itself and come to better terms with the tricky balance of the art and science of communications.
I am not advocating a return to a negotiating table and at The Four Seasons, the 19th hole at Bridgehampton or a bar stool at Smith and Wollensky’s. Let’s make agencies responsible for their product, but reward them for success and initiative. And make those actions transparent.
Agencies have always had their “assets go down in the elevator every night and return the next morning,” and that won’t go away.
Anyone can buy something. But there’s a much bigger job to do. And that is to get all the talent in the agency a client hires, to do their best, most effective and inspiring work for the band and to drive the business of that brand forward. And yes, to increase shareholder value.
But let’s bring creativity to this part of the process also. There is talent to be engaged, not just be another FTE. There is creativity to ask more of, not just to try and get for less. There is innovation to be rewarded, not made a commodity. There are relationships to value, not negotiate for. And yes, the occasional ego to soothe and not inflame.
If we don’t, I fear we will only be procuring mediocrity. Which is lose-lose for everyone.
On a parting note, I did find a decent Rose for a lunch in the sun on the final day. It wasn’t lunch on the beach at the Carlton and Domaine Ott. But it did its job remarkably well. I recognized its value to the day, and didn’t try to re-negotiate the bill.