A decade ago the term ‘procurement’ was not familiar in our industry and few had any inkling of its future impact on the media. So what’s changed? Gordon Patterson takes a look.
First off, the world has become a global village. Then there is a growing belief in the one-size-fits-all approach to business, which is just colonial arrogance. Also, there was the
2008 economic crash coupled with a decline in respect for the country’s business leadership. Take your pick – I’m sure there are more.
The science of procurement is an extremely important contributor to business management, including that of media agencies. The accepted definition (quoted all over the internet) is: “Procurement is the acquisition of goods, services or works from an outside external source. It is favourable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimising exposure to fraud and collusion.”
So procurement focuses on delivering efficiencies? Well, not when it comes to advertising and marketing initiatives. In these areas, the investment is in ideas, insight, space and time that intangibly have the potential to deliver growth… not savings. It’s not about cost per potato.
I use the term ‘investment’ because that is the key. “Investment is time, energy, or matter spent in the hope of future benefits actualised within a specified date or time frame,” according to Wikipedia.
So, misguided and immature applications of procurement principles have led to an increase in what I call ‘mis-procurement’ and define as: “The science of paying a lot less for a little less and expecting growth.”
As you’d expect from this tongue-in-cheek definition, the result is ultimately destructive to all concerned as it undermines the magic of marketing and advertising. It drives media inflation, lowers resource skills and ultimately produces business malnutrition.
It is also input-focused and not output-driven and will therefore result in increased mediocrity and parity as the margin for growth is shaved off annually.
That said, I’m not negative about procurement. I’m confident that as we gain more experience in this relatively new field, we’ll find a new matrix for media and marketing procurement that rewards and incentivises innovation and ultimately focuses effort on results. At this point, we will see the resurgence of respect for strategy, insight and campaign risk-taking. Perhaps marketers will also start buying out-of-the-box thinking.
Growth, or cost per sale acquisition, should be the Holy Grail benchmark for procurement, not cost per point or per thousand.
Gordon Patterson is Omnicom Media Group’s business director.
This story was first published in the September 2014 issue of The Media magazine.