I read in a recent Advertising Age article, that Omnicom, one of the world’s largest media communications groups, plans to bolster its negotiating team’s media buying efforts by adding "professional procurement resources”. At first, the title, “Omnicom Adds Procurement to Its Media Buying Arm,” struck me as redundant. Are Omnicom’s media purchasers not “professional”? Do they not “procure” for a living? Of course the answers to these questions would be “they are” and “they do”. The distinction exists because of what and how they purchase.

As any outsourced procurement outfit will tell you, companies are very protective of their marketing spend categories. The main reason for this has to do with the intangibly qualitative aspects of the marketing process. This intangibility applies particularly to the advertising aspect of marketing. For years, agencies have complained that client’s procurement departments have been hurting the ad business. They argue (correctly) that the procurement of the elements used to build brand recognition and equity is fundamentally different than the procurement of elements used to build a product. When sourcing almost any other category, purchasing professionals have the current price, the new price, and a variety of specification and service level requirements that make the return on a sourcing investment fairly calculable. In the marketing world, ROI can’t be determined with a straightforward formula. While intensive research, market feedback, and sales figures all help to guide marketers’ decisions, there is no x+y=z to marketing ROI. While this is all true, it hasn’t stopped the procurement departments of many ad agency clients’ from trying to apply sourcing theory where appropriate in order to make better media purchases.

Now it would seem that the very same ad agencies that once pointed fingers at “procurement” are turning to sourcing professionals to improve media purchasing and client service. The article cites Page Thompson, CEO-North America of OMG, as saying:

“Procurement will play a role in helping our negotiators figure out ways to save money on media spends. The rules are no longer the same, and procurement is becoming a bigger part of the process. Managing the investment costs that we oversee for all of our clients is the most important things we do and clearly this is an opportunity to change the rules of the game and bring a new dimension and perspective to our negotiating teams."

Daryl Simm, CEO Omnicom Media Group Worldwide, also explains:

"In today's environment, procurement is increasingly at the top of our clients' agenda. By adding procurement professionals to Opera (the media negotiation unit), we'll not only do a better job of meeting client expectations, we'll be investing in our buying teams by providing them with the negotiating resources and training to keep them at the top of their game."

It would seem that Omnicom is making a smart move by creating a situation in which the hard-line procurement executives, Craig Glaser (OMG’s director of procurement) and D.J. Martin (Ex-Colgate-Palmolive director of indirect procurement), can collaborate with, not replace, Opera’s media negotiators. According to the article, “The execs will help formulate negotiating strategies, including pricing and contractual terms, with vendors; measure the performance of the media buys; and assist in the management of vendor relationships.” I’m eager to see how this plays out and whether, like heads, two schools of purchasing are better than one.
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Steve Tatum

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  1. Putting in professional procurement people who were previously working with large clients into the media buying agency will help instill new thinking, discipline & rigor into the agency's media buying process. It will also deliver a competitive edge to media cost submissions critical to winning or retaining any new business.

    That being said, the media agencies have operated quite well without 'professional' procurement staff. Most traders have risen up the ranks and are pretty good anyway.

  2. Procurement will play a role in helping our negotiators figure out ways to save money on media spends. The rules are no longer the same