Masterclass Notes: Procurement’s take on marketers, agencies & 2017
by Johanna McDowell (@jomcdowell) A panel of procurement experts from the private and public sector was recently invited to comment on a number of issues facing marketers and agencies generally, and then specifically, in 2017. The rationale for focusing more on procurement comes from the findings in the SCOPEN agencyScope 2017 study that very few agencies are making direct contact with procurement in either the private of public sectors.
This is a major opportunity for agencies to explore; hence the importance of finding out directly from procurement heads.
1. Public sector outlook
Leading procurement experts in the public sector commented that there will be a bigger focus on pools of companies and agencies to fulfil government tenders. In general, tenders will be far more focused on compliance than ever before.
- US$9.5tn spent worldwide by governments
- R500bn spent on marketing by South Africa government institutions
The public sector is expected to be very active this year.
Procurement in government doesn’t have to be restricted to tenders only. Agencies are urged to be in contact with procurement, regardless of any tender activity. It’s better for government procurement to engage with agencies when there is no tender, as otherwise it could be seen as risky.
Innovative ideas are always welcome.
2. Private sector outlook
Money will continue to be spent on marketing but it will be very focused on driving sales.
Procurement will always focus on working and non-working capital; keep the ratio at 80:20 and all will be well. Agency fees (non-working capital) which exceed 20% of the budget will be trimmed.
This is increasingly important in both private and public sectors.
4. Role of procurement in negotiations
In the public sector, procurement and marketing have an equal role and, in most cases, marketing can’t meet with agencies unless procurement is present. Procurement looks for sustainability of supply, compliance, underquoting and overpricing. All of these are key issues when signing up an agency.
In addition, procurement will look to ‘match’ the size of an agency with the size of a tender — too small and delivery will be a problem; too large and pricing might not be competitive.
Procurement will also benchmark prices
5. What happens when an agency goes over budget? What does procurement do?
Expenditure has to be approved via purchase orders.
Governance on budgets is getting tighter — underspending is as serious as overspending. Controls are essential.
Slight variances may be allowed.
6. And if budgets are cut?
Procurement will help marketing and the agencies revisit the deliverables of a contract and make suitable adjustments.
And the last word — agencies were encouraged to NOT bypass procurement departments.
Johanna McDowell (@jomcdowell) is managing director of the Independent Agency Search and Selection Company (IAS), which is partnered with the AAR Group in the UK. Johanna is one of the few experts driving this mediation and advisory service in SA and globally. Currently she is running the IAS Marketers Masterclass, a programme consisting of masterclasses held in Cape Town and in Johannesburg. Twice a year she attends AdForum Worldwide Summits.