Why indignation at reviews is so often unjustified
The backlash against Audi for pulling its partnership with BBH into review is nonsense, writes Jan Gooding, as she explains why procurement is so valuable to clients
As I read the articles and tweets expressing outrage that Audi were choosing to review their account with BBH I had a very uneasy feeling. Particularly because it perpetuated the demonisation of the professional procurement of agency services.
It is a mindset that I know is prevalent across the agency landscape. Just the word procurement provokes very strong feelings of anger and indignation. Agency folk seem to take reviews personally, and howl that the involvement of procurement will lead to the end of creativity as we know it.
This is patently nonsense and needs to be called out as such.
Public companies have to be on top of their supply chain
The 2010 Bribery Act has made everyone more alert to the financial penalties involved should employees award contracts anywhere in the world that are found to fall foul of the required standards of behaviour.
Money laundering, the Modern Slavery Act and policies on corporate responsibility require the regular scrutiny and proper governance of company activities. So, I am afraid that procurement reviews of significant areas of spend are a necessary and quite proper part of the way big organisations do business.
There is risk for both sides
I do understand some of the fears that these reviews surface. Maybe we can all accept the inevitability and necessity of reviews that involve a ‘professional’ third party?
Perhaps, what is objectionable can be the actual practice and experience of such reviews. A sense that they focus too much on the cost spread-sheets and not enough on the value created by effective delivery. The worry that the baby may get thrown out with the bathwater if the process is not well managed.
No-one said working with procurement is easy
When I first worked with procurement colleagues at BT, British Gas and Aviva I found I had a lot of learning to do.
Understanding their unfamiliar language, working frameworks, objectives and negotiation strategies was the first barrier to overcome.
Getting over my prejudice that they were simply rewarded and motivated by the financial savings they produced was the second.
Buyers often haggle
However, we do need to accept that cost is part of the equation. Reviews are not just about strategy and the quality of promised output.
We need to accept that cost is part of the equation. Reviews are not just about strategy and the quality of promised output"
Let’s be honest that getting ‘more for less’ is a mantra which motivates most consumption these days. We only have to examine the attitudes of consumers, let alone businesses. Haggling has become an accepted norm in the purchase of big-ticket items from car insurance to broadband suppliers. People don’t wait for sales and special promotions and are emboldened to ask for a better price in the moment.
Past behaviour has damaged trust
Let us also acknowledge the part marketing service agencies have played in the situation they find themselves in. The opaque media deals, and general lack of transparency down the creative supply chain, which has been revealed by involving procurement professionals made clients feel like mugs. Trust has been severely undermined.
The issue is the business model
I have a suspicion that the simmering resentment that is felt towards clients and procurement is unjustified. I would observe that it is the context of negotiations that is unfavourable.
There is an oversupply of marketing services, too much value is given away in pitches, and agencies dislike the way they are remunerated based on time spent rather than value added.
Factor in the ongoing pressure on margins, and the difficulty in providing the cash dividends required by group owners, and you have a pretty miserable cocktail.
Creativity is definitely worth paying for
For any marketing director awarding business creativity plays a big part in where accounts are placed. It requires experience and judgement, not a spreadsheet, to make the call.
People with brilliant strategic thinking, unique talents and ideas command and justify significant rewards. And it has to be admitted that settling on a price for unique talent is a tricky business that would test the best procurement person.
Procurement professionals are alert to the value equation
In fairness, the colleagues I worked with in procurement acknowledged that they had a lot of learning to do about what was important when evaluating the purchasing of marketing and creative services. It is true that very often they had more experience in IT and equipment purchasing than marketing or creative output.
But let’s be clear. Any marketing directors worth their salt should be in the driving seat in this relationship, not procurement, to make sure that what is of value is properly paid for. It is a vital part of resource management and the effectiveness of any marketing operation.
Reviews are not cost neutral for anyone
A full-blown procurement exercise is a big investment in time on both sides, and therefore not approached lightly. It is good practice with relationships of strategic importance such as media and creative agencies to invest jointly in working on the ongoing relationship so it is productive and effective for both sides.
Moving an account is a non-trivial exercise, with all the inherent risks and business discontinuity involved that should make it the action of last resort.
There is a rule of thumb
In my experience a general rule for the review of a significant area of spend would be three to five years as an accepted norm. Longer than ten years between reviews would certainly be unusual and implies neglect.
Nearly 40 years, as I understand is the case with BBH and Audi, would stick out like a sore thumb and would be extremely difficult to justify. Good for BBH for resisting a review for so long, but if I was to take over as marketing director it would be beckoning at me as a place that more than justified a look.
I wish BBH every success and hope they retain the business. But I do not share the outrage and indignation being vented at Audi for running a review. I would do the same in their shoes.
Jan Gooding is one of the UK's best-known brand marketers, having worked with the likes of BT, British Gas, Diageo, Unilever and Aviva. She is also the chair of both PAMCo and LGBT equality charity Stonewall, the president of the Market Research Society and a partner of Jericho Chambers. She writes for Mediatel each month.