Warc, 1 May 2014
BRUSSELS: Fewer marketers are leading the negotiation of
contracts with agencies as the participation of the procurement function within
major businesses has almost doubled over the past decade, according to a new
study.
The World Federation of Advertisers surveyed 43 of its
members, which include many of the world's largest marketers, for its Global
Agency Remuneration Trends report and found that in just 6% of cases was the
marketing team solely responsible for negotiating contracts.
At the other end of the scale, procurement teams alone
carried out the process in 11% of cases.
For around half (51%) the procurement function now led the
way, with support from marketing and finance – this was an eight point increase
on a similar survey conducted in 2011. Conversely, the proportion of
negotiations led by marketing and supported by procurement and finance stood at
20%, six points down on the 2011 measure.
For the rest, 6% said it was sometimes all of these and a
similar proportion said there was no formal system in place.
Steve Lightfoot, communications procurement manager at the
WFA, was unconcerned at this development, referring to contract negotiation as
"the back office stuff of marketing".
He told Marketing Week that "marketing is about building
brands and finding creative solutions to business challenges, not finding the
right remuneration method to pay an agency".
Regarding remuneration, the report observed an increase in
advertisers adding performance-based elements to their contracts – 11% compared
to 7% in 2011. Many more (37%) were planning to go down this route.
In addition, 36% said they wanted to explore value-based
compensation, while 66% were keen to link agency income more closely to their
own performance.
Lightfoot thought this reflected the growing role of
procurement. "This is about rewarding an agency for doing a job well, not
penny pinching or trying to screw the agency out of extra cash," he said.
Data sourced from WFA, Marketing Week; additional content by
Warc staff
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