Influence of procurement departments on marketers

Agencies working – or hoping to work – on major corporate accounts in the advertising, marketing and communications industry can no longer ignore or misunderstand procurement departments and their importance in winning both government and corporate clients.

Johanna McDowell, Independent Agency Search & Selection Company (IAS) managing director, warns that the B-BBEE Amended Codes of Good Practice released by the Minister of Trade and Industry in mid 2016 are designed to ensure that procurement is taken seriously by companies that intend to survive, in this month’s SmartProcurement.

“It is particularly important to note National Treasury’s amendment to the Public Preferential Procurement Frame Work Act, which aims to secure at least 30% of procurement from black-owned SMMEs from previously disadvantaged constituencies,” McDowell says.

While agencies are generally aware of this amendment, its importance in the procurement process cannot be overstated, she says. “Procurement’s influence within corporate structures is growing to the point that financial decisions once part of the marketing process now fall under the procurement department. Importantly, major marketers understand their constitutional and legal obligations, and require their agencies to be compliant.”

As a business sector that works on long-term growth strategies and building essential brand loyalty through the creative processes with agencies, marketing has increasingly been required to work alongside procurement experts over the past decade in South Africa and new systems implemented by corporates have eaten into the area of marketers’ control.

“It is vital that marketers to equip themselves with knowledge on how procurement processes work to ensure that their strategies for brand growth do not become victims of rigorous cost cutting measures aimed at ensuring maximum profits,” says McDowell, adding that for both procurement and marketing, getting exposure to a wide range of agencies is crucial to ensure the best value return on marketing investment.

“Long-term sustainability of service providers is pivotal in the agency selection processes made by procurement. Decisions can no longer be driven only by price and even service, but a combination of these and the need to procure from black-owned agencies. Agencies that understand the fundamentals of the entire procurement process are best placed to succeed and create high-value relationships with their clients,” McDowell asserts.