I’m increasingly asked to work with procurement when undertaking an agency search – either to work on the search itself, or to work with them through the negotiation or contract development process. And while relationships between marketing and procurement vary between organisations, there are some consistent themes that are worth addressing.
In my experience, the primary issue many organisations still have difficulty coming to terms with is that marketing needs to be viewed as an investment – not a cost. In other words, it’s not something that needs to be “minimised” – it’s an investment that needs to be “maximised”.
Broadly speaking, the organisational perspective is that marketing teams are evaluated on and seek:
- Improved performance
- Chemistry harmony
- Creative genius
- Strategic brilliance
While for the most part procurement teams are evaluated on and seek:
- Risk mitigation
- Cost savings
And with those perspectives, it’s hardly any wonder both marketing and procurement teams find themselves at odds with each other.
So how should each side approach agency selection or contract negotiation in order to meet the goals of minimising risk and costs, while ensuring maximum performance through best in class capabilities?
Here are ten approaches worth considering:
1. Same sides
First of all, marketing and procurement aren’t on different “sides”. Both are on the same side – so eradicate the idea of “sides” from the get-go.
2. Start early
Many will have read about the idea of starting the procurement exercise early – but how many actually define a working relationship between marketing and procurement before it becomes necessary? And how many actually involve procurement in the entire search process when they know procurement will take the lead on the negotiation?
3. Define roles
Because marketing and procurement look at search and selection, and negotiation through different lenses – define and agree specific tasks for each group, leveraging respective strengths and skill-sets.
4. Define the brief
Brief as you would an agency. Procurement work on multiple contracts for different stakeholders – just as agencies work on multiple clients. So define your objectives, propose your strategy, define go and no-go items, propose negotiation points and spell out your desired end state in a written brief.
5. Acknowledge why you’re here
If your agency search or contract negotiation is anything other than a corporate governance requirement, clearly define why you’re negotiating now. In all likelihood, lowest price isn’t the only or primary reason you’re here – so spell out why you’ve called an agency search or want your MSA or contract renegotiated.
6. Define value
Lowest price rarely equates to greatest value, so define and agree what constitutes “value” to create an MSA or contract that delivers greatest value for the organisation.
7. Don’t chuck it over the fence
I’ve seen many agency search processes conclude with a winning agency, and the marketing team then hand-off the process to procurement to negotiate and finalise a contract. Procurement then have little or no context to negotiate “value” and marketing teams are quickly frustrated that the process takes longer than they’d like and / or key details aren’t covered.
8. Define negotiation points
Every aspect of an MSA or contract is negotiable, so defining where you’re flexible and where you’re not up-front will help your organisation create a true, value based MSA or contract.
9. Identify who has control
Ultimately someone has to lead the negotiation process and whoever’s responsible can save everyone involved time, effort and uncertainty by defining parameters and expectations in the key objectives and outcomes of the negotiation.
10. Look at the sum of the parts
(Not just some of the parts.) As I’ve said before, every aspect of an MSA or contract is negotiable. Greatest value from a contract will be derived from looking at the agreement holistically, rather than piecemeal.
One of the biggest mistakes made by marketing and procurement teams is leveraging the marketer’s brand to lower prices to unsustainable levels. Low rates that are too good to
be true, usually are and the agency will ultimately have to cut corners to keep and maintain your business in the long-term.
While marketing and procurement don’t always have to be best friends, they do have to find seamless and constructive ways to work together. Defining expectations, objectives, true value metrics and negotiation points upfront will help add value to your organisation and help you avoid undertaking a new negotiation – or even agency search – sooner than you’d like.