If agencies want procurement to work for them, they need to give clients full disclosure
I was on a panel at Advertising Week about in-house production units and whether the lack of disclosure by the agency that they were using their own production unit to deliver the work to the clients was actually in the clients’ best interests.
Of course, it isn’t and I have always advocated transparency in what us procurement types called the supply chain (the definition being the sequence of process involved in the production and distribution of a commodity – in our industry that commodity being a marketing deliverable eg TV ad, press, website).
A number of clients have invested time and money in auditing agencies and their financial controls, from invoicing to the authorisation of expenses, is not good. Management reporting is also poor: if I had a pound/euro/dollar for every agency that has told me that they cannot record client time at the level of detail that the client wanted I would be on Necker Island with Richard Branson.
With the media issues (lack of transparency) raised on both sides of the pond and the news of a publisher suing an ad tech platform as they feel that it did not disclose the fees it levied on advertisers looking to buy the newspaper's online ad inventory, when will this end and also how did the market end up in this position?
If I worked on another procurement category such as buying glass, would this issue arise and how would it be dealt with? From my knowledge of inventory procurement, all the costs in the supply chain are managed on an open book basis. If there is a commodity that is market price driven – eg paper – then this is factored in. All suppliers tender on the same transparent basis with their profit margin noted on the same basis. Agreements are made with commitment on volume and or spend.
I am not referring to agency rates but surely agencies should, or need to, have a procurement policy in place when they are buying on behalf of clients. They are often spending vast sums of money on behalf of their clients and that buying must be done with the same ethics and process that we would apply to all items to be procured.
I always ask agencies what their procurement policy is (and of course, it was my job over 13 years ago, when I was at Grey London and then Lowe, where an enlightened chief executive, Garry Lace, felt that he would fight fire with fire and recruit a client side procurement person – ie me). I have never worked so hard in my life and it made me really appreciate how client-focused agencies are and how they will deliver to the nth degree for those clients.
But that doesn’t mean that commercial ways of working and the principles of ethics and being open and transparent on all third-party expenditure go out the window. Agencies do need to invest in this area and clients need to push for it. It is good to see that a few agencies (three that I know of) have invested in procurement resource (after my role 13 years ago – so why has it taken so long?). I hope that this will continue to increase so we can all feel that whoever is buying on our behalf is doing so in line with the best procurement policies and procedures.
If you have any burning procurement questions you'd like Tina to answer in future columns, then send them to her on Twitter @tinafegent