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This guest post originally featured in Procurement Leaders Magazine Issue 51. It was written by Dan Jeffries, senior commercial consultant at Jeffries Consulting
One of the hot topics that gets a good deal of airtime at conferences and in the trade press is the use of incentive-based payment methodologies when engaging advertising and media agencies.
Recently, in the US there has been a lot of noise from search consultants advising agencies to steer clear of incentive-based compensation for various reasons, including measurement and the fairness of the process. I think part of the challenge for search consultants is their lack of a commercial focus that is the bedrock of a good procurement professional.
Procurement professionals are grounded in the ability to understand the commercial realities that agencies and clients are driven by as businesses. Key performance indicators, service level agreements and the like are their bread and butter. Using this standard procurement approach and tailoring it to the marketing spend category allows us to satisfy all three of our key stakeholders: Marketing, finance, and the agency.
By utilising a commercial mindset from the outset, we are able to ensure that the successful agency in any pitch is aligned with the client's objectives throughout the business. Focusing on the agency's unique ability to deliver from an advertising perspective is essential but having a keen eye on the fundamentals of a successful commercial relationship is just as important.
There is little benefit to anyone in finding an agency that meets the needs of only one set of stakeholders – that path leads to conflict from the start. Gone are the days when procurement blundered into marketing with a lack of knowledge of the category and a focus on cost alone. The transformation of marketing procurement has gathered pace over the past five years and we are now seeing many more procurement professionals (in-house or consultants) working hand in hand with their marketing stakeholders to support the delivery of great advertising for their brands.
For a long time clients have turned to search consultants when they were on the hunt for a new agency – I believe it's time they started looking at procurement to lead the way.
Dan Jeffries is senior commercial consultant at Jeffries Consulting