Is Procurement Eating Advertising?

We need to talk about procurement. We really, really do. Procurement, in the sense of a department within the client (I am not talking about production consultants or cost controllers here), is not a new phenomenon but its growing influence sees brands confusing cost and value.  

This is how it works: typically, procurement sends production companies, post or editing companies a form to fill in. Usually they fail to explain anything about the context or why and how the company receiving it would benefit from completing it. The offer centres on an opportunity to be on a roster, usually with no indication of how many other companies are also on the roster or the potential value of work – or why a roster is better for a client than the open market.

The lack of a clear indication of the potential reward (if any) and the unanswerable or meaningless questions often combine to sap the motivation of the company asked to complete it, and the whole process grinds to a halt.

An invitation to compete for work in a reverse auction is now not unusual. You put in your bid and then go online and reduce the amount of the bid against other bidders to win the job. Again, not an attractive proposition to a UK production company or anyone that takes any pride in their work. 

For the UK it is particularly unattractive. If the reverse auction involves countries around the world and is judged purely on price, a production company in a low-cost centre will inevitably win.

A client doesn't need to run a time-consuming (for them and the production company) procurement process to learn that Bucharest is cheaper to produce a film in than London. They could simply ask that question of any producer. “Our study shows Romania is a cheaper place to shoot than the UK? Wow!”

We now have Volkswagen imposing a procurement approach on adam&eveDDB. All production companies’ bids go to procurement and are chosen purely on who is cheaper. So, hypothetically, the director that adam&eveDDB want can be £1,000 more expensive (which could no doubt be negotiated down anyway), but the work won’t go to them.

To see brands built on advertising doing this is particularly dispiriting. It’s extremely strange that AB InBev are taking this approach. Their brands – Stella Artois, Budweiser, Corona, Becks, etc. – are almost entirely built on creative advertising. Without that they are simply coloured water mixed with flavouring and alcohol.

Even moreso VW, who have such a heritage of great advertising, which adam&eveDDB have created over such a long period and which has defined the brand.

Isn’t it stupid for these brands to become only about price, rather than value? Yes.

Our plan at the APA is to build a dialogue between procurement people in brands and production companies, so they understand how production value works and we understand their goals. 

At the moment, procurement and advertising and procurement and production, in particular, talk different languages, so we will try and bridge that gap and ensure that clients get the best value advertising and production.

Is procurement eating advertising? It’s up to us to ensure it doesn’t.