New enemy of procurement 'making life hell for agencies'

Lindsay Bennett
By Lindsay Bennett | 22 January 2019

This interview is part of our February content series on the 'Changing Nature of the Agency Model' that will explore remuneration, global pitches, competitors and more. To read the full feature, make sure you subscribe to AdNews in print.

Procurement see agencies as "lambs to the slaughter" and need to be avoided at all costs, declared Chris Gray, CEO of independent communications agency Daylight.

In an interview with AdNews for the upcoming February issue on the Changing Nature of the Agency Model, Gray identified the rise of procurement as "one of the most disturbing trends in the industry" due to its disproportionate role and influence in the pitch process.

Research from international consultancy Mirren found new revenue generated beyond incremental agency activity represented around 45% of an agency’s business five years ago. Today that figure is less than 20%.

A key reason for the shift is the increased involvement of procurement teams in the pitch process, which is driving prices down and forcing agencies to compete on purely transactional levels, argued Gray.

He said procurement isn’t looking for the smartest or the most creative agency – they are looking for the cheapest.

“Their KPIs are based on buying more for less. In almost all markets around the globe, procurement has become a new enemy. They are making life hell for agencies – and agencies are not responding well to the threat,” he said.

He said that procurement teams view agencies as “lambs to the slaughter” and have become experts at making agencies feel insecure to drive their prices down.

“Agencies need to stand up to procurement executives and stop being bullied. But that does not seem to be happening quite yet,” he said.

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