So says, Scopen Africa whose Information obtained from agency scope 2017/2018 indicates that 54% of adverting 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 due to its focus on selecting suppliers that are viable, have sustainable business models and have a good track record.
Johanna McDowell, Partner at SCOPEN Africa and CEO of IAS – the Independent Agency Search and Selection company – advises that when agencies are looking for business opportunities, being in direct contact with Procurement will be useful. With Procurement’s role being relatively new – it has only come to the fore in the past five years in South Africa – agencies are contacting them less than they are contacting Marketing departments. The agencyScope study indicates that there is an opportunity here for agencies due 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 six.
Unfortunately, agencies and marketers seem to misunderstand Procurement’s role and what it does. Although it has been part of government departments for many years, Procurement is still a relatively new department in many corporate organisations. 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 into 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 early with Procurement will tend to have the upper hand.
Agencies are advised not to bypass procurement as it not only plays an important role in the negotiations but also ultimately has a serious role to play in the final decision made by the marketers when selecting an agency whether for long term or short-term projects.