Ask media agency bosses what they think of their clients' procurement managers and the answers will range from unprintable condemnation to grudging acceptance.
Procurement departments have earned a reputation as the penny-pinching tough guys sent by clients' finance directors to beat down agencies' margins - a hard-nosed approach that grates in the touchy-feely world of creative services.
Some media bosses accuse procurement of showing little understanding of the value agencies add to media planning, and say they take a simplistic view of cost cutting. However, others play down the idea that procurement is the bane of the creative industries, and believe it is only natural that clients should seek the best possible deal from their media agency.
But even leading procurement managers admit some of their number are ignorant of the way media buying works and may lack charm in their negotiating stance. However, they believe moves to encourage best practice in media procurement are paying off, resulting in a growing respect and understanding between procurement officers and media agencies.
Agency bosses sum up many procurement managers as those who know the price of everything and the value of nothing. For their part, the procurement officers say they would love to know the price of everything in the media world, but that agencies fail to come clean about those prices.
One major bone of contention is what happens to the discounts and rebates the agencies receive from media owners for volume deals. The key issue is what proportion of those rebates should be returned to clients and how much should be retained by the agencies.
Jim Marshall, former executive director of Starcom MediaVest Group, rejects criticisms that media trading lacks transparency, although he accepts it has become fiendishly complicated over the years, a situation not helped in the TV field by contract rights renewal.
Marshall regards some procurement managers as "simplistic" for looking at media as a commodity and failing to see the value it adds to their business and its role in boosting sales. He says: "Procurement people try to apply their approach to advertising and media in the same way they apply it to other aspects of their business. That is where the system starts to fall down."
Other media bosses are reluctant to comment on this highly sensitive area of their business. But one says: "As long as you are having a conversation about clients getting good value for the price they pay, that is healthy. If the conversation is only about the cheapest prices, that makes it more difficult."
As the downturn bites, procurement departments are under increasing pressure to find ways of reducing media costs. Brand owners have historically had little insight into how their money is spent, which is why for more than a decade they have sent procurement managers into the offices of media agencies to thrash out the details.
One reason for procurement's unpopularity is that agencies create warm and constructive relations with a client's marketers, but it is left to procurement officers to deliver the bad news about cost cuts. However, procurement managers hope this "good cop, bad cop" routine is becoming a thing of the past.
They are enhancing their understanding of the media world through a forum set up by the Incorporated Society of British Advertisers, which also runs courses to educate procurement specialists about the media industry. ISBA's Communications Procurement Action Group (Compag) is 10 years old and some believe the body has done much to help procurement officers learn the finer points of media trading.
Media Week spoke to four leading procurement managers about their perception within the industry, as well as how they can improve their relationships with agencies.
Patrick Dunne
Group director of procurement, Alliance Boots
Agency: OMD
Do you believe you have overcome agencies' fears about procurement?
No. After years of damaging perceptions about procurement, it will take time and experience for agencies, procurement people and marketers to work closely together. At Alliance Boots, we are hopefully making good progress to address those negative perceptions.
What advice would you give to media agencies when dealing with procurement departments?
Procurement gets a bad reputation because some specialists don't understand what is happening in the market - they just drive the price down.
Agencies need to talk to procurement departments proactively - not just once a year, but weekly and quarterly, so there are no nasty surprises in the annual negotiations.
The issue of rebates and discounts arises in every business sector. But the media agencies' heavy reliance on those volume discounts for their profits is higher than most other sectors. Procurement has to understand how that works. If an agency sits in front of you and says it does not get rebates or discounts, you are working with the wrong agency. The question is: what is our share of that discount?
How can the agency and client reach a mutually pleasing agreement?
Be clear and upfront about what is important, look at the balance between quality and value, and be honest about expectations for remuneration. Also, make sure you have clear performance indicators of how you measure performance.
How can the emphasis be shifted from cost-saving to adding value?
The real emphasis should be ensuring there is an agreed model of value for money. In our model, we sit down in the same room with the agency buyers and the marketing people and make sure we get to the heart of it.
Richard Woodford
Category manager, marketing and advertising, News International, and chair of Compag
Agency: Mindshare
Do you believe you have overcome agencies' mistrust?
We are starting to overcome the mistrust of the procurement function, but we must make it clear that suspicion arises because we are delivering messages that have come from our stakeholders - our role is driven by the corporate agenda. We are often given the job of giving agencies the bad news about where we can save money.
Some agencies believe procurement is commoditising media. Is that fair?
The commoditisation of media has been going on for some time, as media agencies have become more competitive. This has allowed the relationship between procurement departments and media buyers to be driven by their fee, rather than by the level of value they add. We need to shift the market back to the magic of innovation and the planning and strategy - the good stuff that drives the business.
How can you shift the focus from cost-saving to value?
We need to achieve the right levels of transparency to allow us to move to a place where value is a greater driver. The corporations are saying they are spending 10 to 12% of their turnover on marketing, but have no idea what they are spending it on. If we can clear all that up, then we can ask whether we are getting the right level of value, buying the spots that are right for the brand.
Advice to media agencies?
Be transparent, look at new business models and ways of working and show how you can add value and save us money.
What will be your focus over the next two years?
I want to bring media back to the top table; at present, creative agencies lead the agenda.
Jan Gooding
Director of marketing operations at Aviva (with responsibility for marketing procurement)
Agency: Under review
How can procurement managers and agencies build trust?
The role of procurement is to establish a flexible framework for working with agencies. Flexibility should provide both parties with commercial protection, but it must also enable agencies' work to flourish. Trust is created when procurement officers have clarity from media agencies about where and how they create value.
What is the main priority for procurement?
The priority for procurement departments is how to get the best from the agencies they work with. Experience shows that if agencies are uncomfortable with how the relationship is governed, how value is measured and how performance is rewarded, then we are unlikely to get the quality of work we require.
Are you happy with existing remuneration models?
We are always looking to simplify how we remunerate our agencies. Our aspiration is to have transparent and simple cost models that are appropriate for the relationship and give the agency the incentive to deliver their best work and ideas.
What will be the main issues over the next two years?
The main issue concerns transparency. For too long, the world of media and the way in which agencies make their money has been opaque, causing frustration for the procurement community - it undermines trust. Another priority is a more robust and accountable system for digital media.
What advice would you give media agencies?
To recognise that procurement has moved on. Procurement is looking for improved value and a better quality of relationship.
Mark Gomez
Sourcing manager, Barclays Capital
Agency: Mediaedge:cia
Have you overcome agencies' fears about procurement?
The situation has got better and agencies realise we can no longer be circumvented and that we want the same thing: the best quality for our ad spend. Our first meeting should be scene-setting: saying we are not bad guys out to slash margins and revenue, but here to make sure we spend the client's money in the best way. We are on the same side.
What advice would you give to media agencies?
Be open and honest with us. There have been cases where agencies have not disclosed certain cost savings or revenues from media deals unless asked for them, which can create suspicion from clients. Some agencies have huge buying power and we need to make sure they use that on clients' behalf.
How can procurement officers enhance their understanding of media trading?
ISBA runs courses on media, and Compag is a great knowledge-sharing forum for procurement professionals. But, providing I can measure their key drivers and outputs, I don't really need to understand how media buyers do their day job.
How can both sides work together to achieve greater value for clients?
It is in the interests of procurement officers and agencies to align themselves to the client's objectives more closely - what we are trying to deliver and what the marketing is being measured against.
What will be your focus for the next two years?
The move into digital will occupy everyone in the industry and it will overtake traditional media.