This was the finding of Scopen Africa, whose information – obtained from the Agency Scope 2017/2018 study – indicates that 54% of advertising and media agency negotiation processes are led by marketing, while in 41% of those processes both parties (marketing and procurement) 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 procurement needs to be involved.
Procurement needs to be taken seriously by agencies, owing to its focus on selecting suppliers that are viable as well as having sustainable business models and a good track record.
When agencies are looking for business opportunities, being in direct contact with procurement will be useful, advises Johanna McDowell, Partner at Scopen Africa and CEO of The IAS (The Independent Agency Search and Selection Company).
“With procurement’s role being relatively new, agencies are contacting them less than they are contacting marketing departments. The Agency Scope study indicates that there is an opportunity here for agencies, owing to the low level of contact by agencies that procurement receives. For example, in 2017, while marketing might have received as many as 27 cold calls from different agencies, procurement only received 6.”
Unfortunately, agencies and marketers seem to misunderstand procurement’s role. Out of the 217 marketers who were interviewed in the 2017/2018 study, 11% shared that they do not have a procurement department.
The opportunity from a new business perspective is for agencies to introduce themselves to the individuals who work in the procurement department, because they know exactly what the marketing department needs and will be a route to the marketers who have to abide by procurement rules when it comes to bringing on new suppliers. Larger corporations can take up to three months for a new supplier or agency to be included onto a vendor database because of the rigorous internal processes that must be completed. For that reason, agencies who form relationships with procurement early on tend to have the upper hand.
Agencies are thus advised to not bypass procurement as it not only plays an important role in negotiations, but also, ultimately, has a serious role to play in the final decision made by marketers when selecting an agency, whether for long- or short-term projects.
For more information on The IAS, please visit www.agencyselection.co.za.