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The Big Bad Wolf Called Procurement
By Oksana Yerofeyeva
Senior Vise President
Special Projects Director
More often than not these days, the big, bad wolf with a seat at the pitch table is the company's procurement director, and that is causing headaches for both ad and PR companies who feel that quality, creativity and experience should carry the day - every day.
However, with lower budgets brought on by the recession and the need for companies to get more proverbial bang for the buck, the feeling from the company side is the procurement officer is crucial to the pitch equation.
"These days, no business, regardless of its nature, can do without direct involvement in its activities from the procurement division," said Ruslan Safarov, procurement manager for Danone Ukraine. "Procurement is all about spending discipline and challenging internal needs. The procurement team recommends the best options for spending in most effective ways. In liaison with finance division, it serves as a safeguard against irrational and unreasonable spending."
It is estimated that in Europe procurement professionals are involved in 80 percent of advertising and public relations pitches, an increase of as much as 40 percent over two years ago. Ukraine and Russia are not exceptions to this trend.
"Why should we pay your company three times more for crisis training than what we would pay a professional training agency?" was one remark we heard recently.
The easy answer, of course, is that the PR agency has probably advised dozens of companies in real crisis situations, while the training company, though steeped in theoretical knowledge, has never "been there and done that."
Additionally, of course, the public relations agency has learned through experience to think a certain way during a crisis. No amount of book study can produce a good trainer if he or she hasn't had the battlefield experience and temperament to calmly advise in a crisis.
The same goes for the advertising side, where creativity is a premium. Line up three ad agencies, and they will all have strengths, but might charge at totally different rates depending on their experience and record of winning for clients.
The other side of the argument is simply that it is not the procurement director's job to quash good agencies in favor of less expensive ones - that the procurement officer is merely a voice at the table watching out for the bottom line.
That's the way it should work.
Recently, however, WPP's JWT pulled out of a four-way contest for United Parcel Service's $140 million worldwide account because the review was largely being led by - according to The Wall Street Journal - procurement executives "eager to push down costs."
The review, according to JWT Chief Executive Bob Jeffrey, "centered on protracted legal, contractual, and financial discussions that were not in the best interests of JWT… These terms would seriously compromise our financial credibility with other clients if there was any inkling that we had agreed to them."
However, rarely does an agency pull out of a big pitch. They stay in the hunt thinking that they can find cost-efficiencies even if the rewards of winning the business are pushed down. However, that is a dead-end street.
Most often, cost-efficiencies mean fewer good people and other resources on the account.
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