Consultant of the firm External View Consulting Group and author of the book Buying Less for Less: How to Avoid the Marketing Procurement DilemmaGerry Preece is convinced that agencies have everything to gain from knowing how to negotiate with supply, for the sake of campaigns and marketing initiatives.
What does the procurement department do?
Although supply services are less prevalent in the country, their emergence is a global phenomenon. In constant rise in the United States, nearly 50% of advertisers would use such services, an even larger figure in Europe.
In concrete terms, the supply team provides control over expenses and negotiates an advertiser's contracts. It must demonstrate that the expenses of the company are justified, also looking at the rates, costs and dedicated teams of the agency with which it has a contract, often by comparing the figures given to established scales. But even more, one of the service's missions is to "add value" to investments, an aspect too often understood as the need to reduce costs, by any means.
From this broken relationship chain results a detrimental aspect for the marketers, who perceive agencies as unrestrained expenses, which must be controlled at all costs.
A question of trust
"Fifteen or 20 years ago, it was not common to have a contract with an agency." A simple statement, but that says a lot. Gerry Preece points out, an aspect that has changed dramatically in the last 10 years is the decline in confidence of marketing managers towards the agencies they deal with. And if the agencies have already had the role of managing the money allocated to them, the market has changed and marketing managers now see them as suppliers – to negotiate downward – not business partners. An unfortunate finding, in a way, but which partly explains the emergence of these supply services, which seek to sign the most advantageous contracts.
This broken chain of relationships results in a detrimental aspect for agencies: marketers perceive them as unrestrained spendthrift, which must be controlled at all costs. And that is why, according to Gerry Preece, advertisers believe they are protecting their interests with the help of the supply department, which continues the mission of saving, always: "They are watchdogs with the mission of find a culprit. "
Facing the supply, in four lessons
If agencies perceive supply employees as adversaries, they are partly right. But they hold more power than it seems.
1. Negotiation is a process
Agencies need to understand that the negotiation does not end when the contract is signed with an advertiser. It is an ongoing effort that spans a very long period, if not the entire duration of a business relationship.
2. The negotiation is almost always at your expense
What Gerry Preece calls the "trading dilemma" is that the advertiser's seasoned negotiators always seek to make their counterpart believe they are collaborating. But collaborative situations are rare or nonexistent. The negotiation is competitive, it must be recognized. "Then you have to know if you're wearing the coat of the wolf or the sheep."
3. Agencies are not powerless
Too often, agencies feel powerless when it comes to their customer's supply department. "You have more power than you think," says Preece. Only you must learn to speak in their terms and take their turn to influence them. "
4. Agencies are afraid to push the bill too far
Agencies too often fear ruining a relationship, while according to the expert, this is unlikely to happen. "You do not have to worry, the advertiser will not be able to go somewhere where he does not want to go."
Learn to talk marketing
In order to understand how to approach the supply department, you need to understand how it works, says Gerry Preece. This service must be approached by parameters they include: numbers, comparables, investment returns, etc. "Already, the nerve of war is to remind them that marketing is not an expense, but an investment." They work to get an attractive return on the money invested. And to get their attention, you have to give them an overall picture of why money should be used and in what context.
Only then, it is possible to influence them.
Gerry Preece will be in Quebec on February 10 for an exclusive training for members of the Association of Creative Communication Agencies (A2C) entitled Engaging procurement … and how agencies can still win.