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While there are exceptions to every rule, procurement officers—not in-house general counsel—are the bane of every PR firm’s existence.
Make no mistake; while most procurement officers say otherwise, they treat strategic public relations in the exact same way they would an office supplier, furniture manufacturer or security guard service. They are empowered to find (and squeeze) the bejesus out of every supplier or vendor, and negotiate the lowest price possible while still assuring the company receives a quality product or service. Period.
I’m not alone in my thinking. Procurement is weaseling its way into more and more negotiations between PR firms and their clients. A PR Council survey showed that 32 percent of agencies that bill between $10 million and $25 million must deal with procurement officers. And nearly half of firms billing $25 million or more annually interact with procurement.
What is more, in a 2014 survey of member firms, nearly 40 percent of PR Council agencies said procurement “did not deliver in regard to relationship management/stewardship.”
I totally agree with my peers on the agency side, and I must tell you things are only getting worse. Take, for example, Procter & Gamble’s decision to stretch agency payment terms to 75 days, from the previous 45 days. And Anheuser-Busch InBev stretched its payment terms to a whopping 120 days. Guess who pushed for those changes? Procurement, naturally.
Corporation-dominated industry trade groups would have you believe procurement execs see PR as a key, strategic partner. Sure, and Vladimir Putin has no further designs on global expansion.
The average procurement officer treats PR as a pure commodity. That’s not going to change anytime soon, so the onus is on PR managers and executives to affect change. Here are a few tips for PR agency pros to make the best of a bad situation:
• Request that your CFO attend as many rounds of the new business process as the prospective client's procurement officer does. The hope is that they can bond. Worst case, your CFO will hear exactly what her/his corporate counterpart hears. That just might make their subsequent negotiations more civil.
• Rather than allow the in-house marketing communications lead to disappear during the negotiating process, ask if you, the leader of the agency pitch team, can provide updates on the procurement process. If the procurement officer is jeopardizing the potential relationship, ask if your in-house MarCom counterpart can intercede on your behalf (Note: only do this if you're confident you've really connected with the marketing communications decision-maker.) Otherwise, be prepared to give way to the lowest-cost competitor.
• Draw a line in the sand if the procurement officer is requesting absurd cuts. Even if it's is your dream account, it's not worth jeopardizing the profitability of your business (or swallowing your pride).
• If possible, determine how the procurement manager perceives the role of an external PR firm. If you detect that she/he feels file cabinets and paper clips have a higher place in the company's accounts payable food chain run, do not walk, away.
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Steve Cody is co-founder and CEO of Peppercomm. He can be reached at [email protected]
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