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Contrasting views regarding creative services procurement

The need for Procurement services is a divisive issue. Many agencies complain that it is a stick that the brands owners use to beat them down on price, as it takes no account of the value that an agency brings to the relationship between the purchaser and the supplier.  

Contrast the latest views of Paul McIntyre, who is editor-at-large at AdNews Australia with the opposing opinions of commentators in the procurement business. Paul contends that Agencies get caught up in a ‘race to the bottom’; -

‘Agencies are their own worst enemies but the myopic nature of corporate procurement means quality has to take a hit. For media agencies, their way out is to start passing on the pain to media owners with all manner of inventive schemes to bolster their own bottom line – some bordering on dubious. Alongside innovative media and production arrangements, younger people with less experience are taking bigger roles, resulting in more client frustration’.

However Steve Puttock, MD of Schawk in London suggests it’s time to unbundled creative spend from production, arguing that media should be managed by specialist media houses with global reach.

‘First, with media fragmentation and the subsequent re-allocation of advertising budgets across new media channels, the agency is a less obvious choice for production as campaigns now need to be deployed consistently at consumer touch points that go beyond advertising’s remit. Second, the increasing geographical reach of brands can lead to brand inconsistencies across different regions. By bringing production into a pre-media house that mirrors their global footprint, brands can save money while also maximising brand impact and uniformity.’

Is it time for a reality check? Should ‘agencies should grow up quick’ (as suggested by Ralph Daniel of Third i Marketing).

‘The uncomfortable truth for agencies is that the chief marketing officer is in on this development. The squeeze in fees that the advertising industry is experiencing is as a result of better communication between marketing and procurement, not worse. The end result, as far as the CMO is concerned, is that their marketing dollar goes further – without a drop in quality.’

Whatever the competitive situation faced by most creative services it is unlikely that the pressure on delivering value for money services will diminish. The key is how well the business is equipped to capitalise on its margins and recover costs from existing and new prospective clients.

Where the agency portfolio includes a proportion of retained clients that ‘demand satisfaction’ there will be capacity available from others that have a less prescriptive outlook. The agency needs to look for ways to identify these hidden gems.

Please share your views at editorial@paprika-software.com if you are interested.