Procurement: The good, the bad and the ugly

DDB's Frank Palmer reflects on the impact of procurement on advertising agencies.
Frank Palmer

By Frank Palmer

I always thought procurement was a term that got tossed around in large supply chain management systems. And as far as I knew, it meant sourcing the best possible price on commodities.

If you used that word, you were talking about negotiating the lowest price per unit on stuff like lumber, grain, nails or – if you’re the army – bullets.

But what role does procurement play in the world of marketing and advertising? A better question to ask is, what role should it play?

Naturally, I can see it having a place in the area of media buying. But in the domain of planning or media strategy, it has absolutely no place at all. In the same way that solid creative development is considered an art, planning and strategy are art forms too. These invaluable services should never be commoditized.

What price can you put on a great idea or a great strategy? They don’t come in packages of a dozen.

Unlike manufacturers who produce goods for retailers, the agency business doesn’t keep piles of inventory on shelves. Nor would the client want it to.

Sure the better agencies have deeper piles of talent waiting to be challenged. But unlike a warehouse filled with identical widgets waiting to be sold for the lowest price, everything an agency’s strategists and creative teams produce is customized for each client after receiving a thorough brief.

I can fully understand and respect the need for procurement in certain cases, like government RFPs. And I realize that’s a reality that’s here to stay. But like the title of the famous Clint Eastwood movie, The Good, the Bad and the Ugly, procurement needs to know its place. Otherwise, instead of being good, things can get very bad.

When is procurement a good thing? When it is carried out with a complete understanding of the roles that need to be played and the rules that need to be followed, and when proper steps are taken to ensure success at every checkpoint from beginning to end.

Often this doesn’t happen.

And when procurement doesn’t follow the rules, that’s when things tend to turn ugly.

Good procurement management fully understands the criteria for a successful evaluation process. And those involved also respect that it’s of the utmost importance to maintain a good relationship between client and agency as things proceed. Participants can (and possibly should) play “good cop/bad cop,” but it’s never okay to be the ugly one.

Right now procurement in the ad industry is getting a bad rap. The word on the street is it’s getting ugly because often the players have no regard for the rules of the game, and little respect for the other team.

When procurement is directed at nails, ammunition or soap, I can understand the drive to get the best price. In fact, in some cases, I think people should get a bonus for their effort. But when it comes to hiring an ad agency, is pushing for the best price a bargain? Or is it really a handicap?

I would like to think that when the decision is made to hire an agency, it’s because it’s the right fit. It’s chosen because it has the best talent, strategy, systems and understanding of the challenge, and not because they were $10 per hour less (or more) expensive.

Why?

Because great client/agency chemistry, trust and overall relationship is priceless.

When agencies work cheap, clients get what they pay for. But when the relationship is formed on the right foundation, a client will be richly rewarded, project after project, in incredibly valuable ways that can’t be measured like boxes of soap or shipments of lumber.

If it has a place in this business at all, the advertising industry and the people it serves should demand that procurement be carried out exclusively by experts and team members who understand and specialize in client/agency relationships.

Otherwise, let’s just use a few of those cheaply-procured bullets and shoot ourselves, because buying machinery doesn’t require the same skill-set as buying creative talent.

And if you treat them both as one and the same, it’s not just the agencies that will lose out. The situation ain’t pretty for the clients, either.

Frank Palmer is chairman and CEO of DDB Canada.