This post is by ‘THE BUYER’ – an anonymous former senior manager in the procurement profession who offers an occasional perspective to the world from a procurement driven point-of-view.
Most people in business (and even, on occasion, within procurement) now accept that marketing agencies are different.
Different to ordinary suppliers they mean. Ordinary suppliers that is, that supply normal things like office stationery, IT stuff or raw materials – the goods & services that make business work. Marketing agencies supply something else; something more visceral, something slightly special.
But how different are they really, from regular suppliers of goods and services, and why?
Categorising and ranking suppliers is standard procurement practice nowadays. Though their lists rarely include marketing agencies. There is something unreflective about their performance if it measured solely by aggregate expenditure per annum, or volume purchased, or their risk profile or where they are based geographically – which postcode.
In fact, there are few other service suppliers that would fit into the ideal ranking matrix for ad agencies… that is their effectiveness at driving up sales. The measures for which are growing increasingly scientific by the day. Most marketing agencies are employed directly to influence the corporate outcome. It is just ironic that suppliers so valued for their output, usually always price their wares on their inputs.
Maybe that is why the Marketing department is often perceived by the in-house procurement team as the last bastion of non-addressable spend for them. The last place in an organisation that Procurement traditionally break down the barriers of resistance to their influence. As CMOs successfully defend their patch citing some delicate insight on their agencies’ performance, which cannot be interfered with by a clumsy procurement department.
One other factor separates the marketing agency from mere ordinary suppliers. That, invariably, there is a natural bias towards multiple sourcing as agencies increasingly specialise. As opposed to the obvious single sourcing bias of professional procurement – keen to aggregate volume for greater discount. Accordingly there always seems to be a higher ratio of smaller firms on the supply side of marketing – to offer specialisation and lower overheads (and, in all likelihood, to separate out easily damaged egos).
But how special are they really? And do we buy their earnest efforts, their naked output right now or, actually, their potential to deliver something special in future, as they climb the learning curve of insight into our world? Do we sometimes buy ad agencies on the basis of potential results rather than immediate outputs?
That is often how we buy people. How the corporate world buys professional staff. They are hired more often for potential than their immediate contribution, instant productivity or earnest efforts.
Of course, it is a cliché that an ad agency’s greatest asset is their people. And, generally, specific types of people work in marketing agencies – extroverted, creative and gregarious, they are often described as ‘people’ people. So does it not make sense to manage agencies just like people?
All enterprises need a mix of people with different skills and contributions to the team. Similarly a client needs a mix of agencies that bring different things to meet different needs within the same stable.
For instance, scoring an individual’s actual performance directly against their adjudged potential gives a comparative result. This is often the start of the annual appraisal process for staff. Could the same matrix be used for marketing agencies?
The nicknames above for each quadrant quickly illustrate the spread of both performance and potential. And all offices have a star or two, a good number of troopers, many further developers and, always, of course, the odd problem child.
STARS are usually fairly rare, and no team should have too many for they tend to leave after a short while to go on to better things. Stars can also fade, and fall into another category as time passes and their flame decreases.
TROOPERS: All offices need troopers. They do the majority of the work, reliably and to a set standard. They keep the wheels turning day after day. They will never set the world on fire, but they do keep it spinning.
FURTHER DEVELOPERS: Almost by definition, most new recruits are to be developed. And as time passes it becomes obvious which other box they progress in to or regress in to. Time always tells.
PROBLEM CHILDREN are often a problem for a reason. IF that reason can be put right, they can sometimes become STARS, usually troopers, but rarely further developers. Usually they just have to go.
Maybe there is something that managing agencies can learn from how we manage professional staff. Procurement would understand that.
Please leave a comment with your thoughts.