Tuesday, November 02, 2010

The Solution To Procurement Isn’t A Task Force

The Association of National Advertisers (ANA) has set up a procurement task force to repair the widespread misalignment between procurement execs and their marketing partners.

That should do it, don’t you think?

Granted, it’s not an easy job. Especially knowing that in a study done this summer, it was discovered that only 49% of marketing execs thought their own procurement units were knowledgeable about marketing.

So here’s an idea. Instead of having the agency saying that their efforts are worth so much and the advertiser claiming that it’s too much, why don’t we let the consumer decide?

This can’t be done for the whole agency fee, mind you. But it can be done for the time an agency spends creating commercials. Currently agencies bill out by how many work on creating the campaign and how many hours they work on it for.

Advertisers pay for effort based on agency time sheets.

With digital data, advertisers can now accurately measure how long viewers watch a commercial for. If we consider this to be a viewer time sheet, why not have advertisers pay based on that.

Instead of paying based on effort, they would be paying based on outcome.

Critics will argue that the outcome the advertiser wants is sales, not time spent with the brand. Just because viewers watch a commercial, it doesn’t guarantee that they’ll want to buy the product.

That’s true.

But what’s also true is that consumers probably won't buy the product if they don’t watch the commercial.

In other words, viewing the commercial is a necessary precursor to persuasion having the chance to occur.

So, there is value in time spent with the commercial.

If the job of a procurement officer is to put a price on value, perhaps they should start with a better definition of what the value is that an agency actually offers.

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