A study published by the US Association of National Advertisers asked brands: “Are you willing to pay different types of remuneration models to agencies?” Some 75% of the brands surveyed said “Yes”. The number one reason was because it establishes a precedent that the agency will deliver business results. The ninth reason was savings. Brands are more willing than ever to pay in alternative ways, if there is proof in the pudding... Marketing procurement has had a stigma for many years that it’s all about price cutting and a race to the bottom, and agencies have borne the brunt of that.
Marketing procurement, in turn, has had to work increasingly hard to re-establish its positioning and educate the agency community about the internal force to drive brand growth. The way brands are engaging with agencies is becoming more and more flexible. It’s less about price primarily - though it will always be about price partially. So, if it isn’t entirely about price, what else is considered? Well, brands are looking to find best-in-class suppliers who share the same values as them, and this will start trickling down into how RFPs are rewarded. Sustainability, DE&I and representation at all levels is increasingly a consideration.
Marketing procurement demands more coherent thinking – aligning marketing and procurement with the brand. In relation to shooting adverts, it’s about the representation both in front of and behind the camera. Brands are starting to ask agencies to come on that journey with them. Gone are the days when only the cheapest agency will win. What must happen - particularly within global Tier 1 brands - is an articulation of where marketing procurement wants to be; primarily in terms of the perceived value it generates. And this needs to trickle down f rom the leadership team to the people negotiating those deals day to day.
Procurement is therefore a value generator, not a price cutter - and must be seen as such. Let’s be clear: it’s no walk in the park for procurement. They’re often the teams brought in at the last moment to negotiate the best deal, with no prior knowledge of the value the project or retained relationship will deliver for the cost. The best marketing procurement teams are able to serve both masters – the marketing teams and finance – who they often report to. Which is why, as an agency involved in a process, it’s so important to bring them along on the journey. In 2022, it’s about finding agencies that can deliver what marketing wants, but not just at the cheapest price. That requires outcome-based remuneration and being able to track the impact of the strategy. The agencies that will succeed are the ones that can help hold the brand’s hand through selling in various remuneration models. Remuneration models.
Agencies need to understand the alternative remuneration models available to them. It’s argued that rate cards have no inherent value to a brand. If you want to have a race to the bottom, send a rate card. Instead, share something that includes outputs and outcomes, and details of your shared values. This shows you care about the long-term brand objectives and how to get there. It’s about value-based selling. Agencies that can articulate deploying different remuneration models, and make it easy for the brand to understand and buy - clearly showing measurement and impact - will make the most profit in 2022. So, how can agencies help?
Build a rapport with marketing procurement early on - these experts are integral to the process.
Be collaborative and invested throughout the relationship.
Procurement and brands lean into expertise – so refine your offering and keep it focused.
Don’t disregard marketing procurement in your channel plans; ensure you have a stream of activity that brings it onside.
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