Procurement is a two-way street that is not closed off to negotiation – agencies just have to get better at understanding contracts and payment models in order to be taken seriously at the final hour, says R3 Worldwide’s Melissa Lea.
The managing director encouraged attendees of The Drum’s Agency Acceleration Day to nix the belief that procurement is “the evil empire” in the business relationship and upskill on basic business matters in order to speak the same language as them.
“Be considered and be kind,” she said. “You're people and you're working in this together. Procurement ... have a job to do, they're trying to get the best for their business. They're not the enemy. Work with them closely, be reasonable and be forearmed.”
Her biggest tip for being prepared is to have a good working knowledge of practices – and remuneration models – in the industry. This way, if an agency does not agree with the option on the table, they can clearly explain why it may not work for them and offer a realistic alternative.
Attending events, speaking frankly to peers and tapping into the knowledge bank of the 4A's can help give young agencies a solid grounding on which to negotiate.
“In addition, the ANA Financial Management Conference usually includes several sessions on this topic” she said. “ProcureCon also hosts a number of events that could be helpful. They could also reach out to their local ad club for advice and networking.”
To make a better decision with regards to the kind of contract to ask for, Lea also advises collecting thoughts from the wider agency – not just those will work directly on the account. This includes speaking to finance and administration teams, “who know how to execute these compensation models”.
Finally, Lea recommends reading contracts thoroughly – three times over at minimum – to really understand the finer details. But, while a strong grasp on the legal speak is necessary, it’s also important to remember contracts are “not written in gold”.
Agencies need to remember they can and should haggle with procurement as much as possible for the sake, Lea said.
“Say, ‘You're saying I have a net 90-day payment – can we compromise on that?’” Start at net 30 and see how we go. Be considerate, because if you're considerate they'll be considerate. They are not going to succeed if your business is not succeeding. It's a two-way street.
“But remember procurement people are hard, blank negotiators. So, you need to be prepared to negotiate and understand what's driving them.”