“Advertising agencies have to grow up. And quick.” by David Rae, Marketing Services Procurement

November 18, 2009


This commentary is by David Rae in an AdAge article by Jack Neff on marketing procurement and cites MorganAnderson in its reference when stating “fewer than one in ten marketing procureres have experience in marketing.”   In addition to the comment by Mr. Rae, there are comments by Jonah Bloom, AdAge, and Darren Wooley, P3 Australia

MorganAnderson Consulting


A guest post earlier this week, written by Ralph Daniel of Third i Marketing, points to a recent study conducted by Advertising Age magazine and how it discovered that fewer than one in ten marketing procurers have experience in marketing.

It wasn’t particularly scientific work, comprising of looking through the LinkedIn profiles of marketing procurement folk. Neither did it satisfactorily address the more important question of whether marketing experience is actually something that those who buy marketing services should have. I would argue not, Advertising Age would no doubt disagree.

Take this comment by Miriam Frawley, a principal of e-Diner Design & Marketing, New York, who claims she was there at the beginning of aggressive sourcing. “What’s happening now is that it’s all data based,” she told Advertising Age.

Good. Spending huge amounts of money on one of the largest categories of indirect spend (for many, the largest) without recourse to solid data is irresponsible at best and, at worst, directly conflicts the ultimate goal of maximising shareholder value.

Neither can these agency folk argue that the process is solely a penny-pinching exercise, where procurement is making huge corporate-wide marketing decisions on their own. The uncomfortable truth for agencies is that the chief marketing officer is in on this development. The squeeze in fees that the advertising industry is experiencing is as a result of better communication between marketing and procurement, not worse. The end result, as far as the CMO is concerned, is that their marketing dollar goes further – without a drop in quality.

It’s an uncomfortable truth.

But there is something of a gathering of momentum. At the Advertising Age Awards, procurement was in the limelight again as various agency folk complained of its influence. And the magazine’s editor Jonah Bloom delivered a critique of procurement at a recent conference where he complained of the dwindling margins of the agency industry.

In his speech, Bloom mentions an “obsession with ROI” as if it’s a bad thing and noted that the margins of the world’s top-100 advertisers had dropped by just 0.1% to 11.5% while that of agencies had dropped by 1.7% to 10.5%.

Now, time to take a breath. Have we not just navigated one of the most challenging economic crashes in the best part of a century? Are companies the world over not continuing to go bankrupt? Or did I dream all of that?

I find the whole debate a bit disturbing – as if creative talent (of which I believe in and stand behind – writers are, after all, creatives, as are the photographers and illustrators we use) believes it lives in a different world where something as crazy as return on investment doesn’t exist.

Matthias Gutzmann, the vice president of international operations of the Procurement Leaders Network, recently joined a group of procurement executives in meeting with senior representatives of the advertising agency industry. He reported back on a productive and informative session.

It’s through this type of communication that agencies will understand better how procurement works, and vice versa – not by throwing rattles out of the pram and complaining that buyers are making multi-million pound investment decisions based on good data and return on investment calculations.

For the online source click here.

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