Procurement – a positive force for change

Published on 25th October 2017

Purity Managing Partner Mark Dunn explores the increasing influence of the Procurement function, the approach that should be taken to create a positive working relationship and steps that we have taken at Purity to derive a clear point of difference in the sector.

There are some who have worked in marketing agencies for a number of years who may look back to what they would somewhat wistfully call “the good old days” . . . to a time when a spurious margin could be applied to anything and everything and marketing budgets were rarely ever reconciled. In those bygone times agencies would also often include a ‘contingency line’ within budgets that was rarely spent and even more rarely ever returned.

It might also be said of this time that entertaining a brand manager, or marketing director, could lead to a campaign being signed off without actually having to pitch and justify a budget. The changing times within the corporate world have been viewed with frustration by some agency leaders whom have simply failed to move with the times. In particular over the last 10 years there is one client side process and responsible department which has had more of an impact on agencies than almost anything else. The rise of the procurement team.

It has taken a while for both the procurement function itself, and the agencies that supply to them, to learn both how to fully appreciate and understand what each other actually does and moreover to work in collaborative harmony, rather than seemingly against each other.

An agency that learns how to work closely with procurement, and value what it brings to their own processes, can find that in fact it becomes a positive force for change within a business. It naturally makes an agency think smarter and work better. An agency needs to demonstrate that it is at the forefront of its industry, constantly developing, and looking to add value to a client at every possible turn. Our view at Purity is clear and we seek to demonstrate this through a number of aspects including, but not limited to:

– Demonstrating thought leadership and how this can add clear and significant value to a client.
– Measuring campaign effectiveness defined results that are attributed to the financial cost of a campaign.
– Commercialising campaigns to generate a return that can be put back into the client’s business.
– Offering, without being asked, clear and measurable KPIs (Key Performance Indicators) with financial consequences should the agency they fail to meet them.
– Service Level Agreements put in place and being clearly adhered to with agreed consequences if not met.
– Transparency on costs with budgets being based on management time rather than just a percentage of a budget that the agency hopes works in terms of overhead and one a client cannot rationalise.
– Optimisation of costs for future or ongoing campaigns that move from one financial year to the next demonstrating a zero-based budget perspective, for example, where costs can actually decrease from one year to the next.
– Detailed project reconciliations with all spend justified.

Some of these processes can seem arduous to a fast paced agency constantly pitching and working on a multitude of clients at any one time. However, putting clear and defined processes in place will ensure that an agency has the confidence of a Procurement Manager from day one of any tender.

As a business, being more transparent and accountable actually makes life simpler, and agencies will be amazed how it makes them assess their own ways of working and leads to them being more streamlined, efficient and profitable. As such, the time spent developing a smarter and more transparent business is well worth the investment. Procurement is here to stay and should be viewed as a positive for both clients and agencies.