Please login to the form below

Are reverse auctions the best way to procure marketing services?

Managing Director Martin Brass discusses what a reverse auction is, and whether it truly is a good way for healthcare companies to drive efficiencies when procuring marketing services.
Many years ago I was invited by a friend, who was working at PWC at the time, to a demo of an innovation in enterprise purchasing technology. I have to be honest that at the time, Fred Bassett and I were working with Robbie Williams and his managers developing a new strategy and business model for music artists, so this invitation wasn’t exactly “rock and roll”. Nonetheless, I decided to attend. What I experienced that day was a reverse auction.

Fast forward 13 years. Blue Latitude Health is now a 70 person company with global and regional clients from some of the largest companies in the healthcare sector. These companies have developed very sophisticated procurement departments whose role is to purchase products and services in various categories at an optimal price.

An invitation to race to the bottom

What is a reverse auction? Well, simply put, it is the same as an auction except that, instead of a group of buyers bidding up the price on an item, a group of vendors are bidding down the price. In a regular auction, the market value of an item is based on the highest price that a bidder is willing to pay for it. In a reverse auction, the value is decided by the lowest price that a vendor is willing to sell it for.

Several weeks ago, I received an invitation from an agent of one of our clients to participate in an auction for market research services. On reading the small print I became aware that this was, in fact, a reverse auction. We had been selected as one of 20 or so companies to bid to become a preferred global partner for research services. What was being auctioned was our rate card. The two companies with the lowest average rate cards would be chosen to join their panel of vendors. 

I was intrigued enough to accept the invitation and complete the comprehensive RFI documentation that would qualify us in or out of the process. However, it made me question whether a reverse auction would actually work for the procurement of services at all. Sure, if you are buying a commodity, where the quality of the product is standard (or within a range) then a reverse auction will simply choose the most efficient vendor. If the vendor is efficient and has a high profit margin, then they can afford to sell their product for a lower price. But services are different, right? Services are performed by people who are experienced and expertly trained and the output, or ‘product’, is not standard, and in the case of research, is often unknown!  

Download the full article from Blue Latitude Health

10th October 2016



Company Details

Blue Latitude Health

+44 203 328 1840

Contact Website

Blue Latitude Health
Crusader House
145-157 St John Street
United Kingdom

Latest content on this profile

Big data, privacy and the rise of genomic testing
Blue Latitude Health speaks to Johan Christiaanse, Marketing Director at BGI, to find out how the medical profession can overcome one of the major barriers to precision medicine – big data.
Blue Latitude Health
Lynch syndrome: a patient perspective
Blue Latitude Health intern Costantino Ciotti gives an insight into life with Lynch Syndrome, a genetic condition associated with colon cancer. Here he explores the patient’s perspective, including treatment options, and gives his advice for healthcare professionals diagnosing patients with a genetic disease.
Blue Latitude Health
What does programmatic advertising mean for your pharma marketing strategy?
Senior Associate Consultant Jiayi Chen explains the benefits and pitfalls of programmatic advertising and reveals how it can impact return on investment in your marketing campaigns.
Blue Latitude Health
How to measure marketing success: profit vs ROI
Measuring marketing activity is proving to be a major challenge in pharma. Here, Senior Consultant Paul Townley-Jones explores the meaning of success and gives his tips for measuring efficiency and effectiveness, along with the formula for calculating profit and ROI.
Blue Latitude Health
Perspective on biotech leaders
In the latest issue of Perspective magazine, seven industry trailblazers reveal the trends, challenges and opportunities they anticipate in the biotech sector, from empowering patients to deciphering big data.
Blue Latitude Health
Global customer research in healthcare: 10 tips for capturing insights that matter
What makes a strong brand? One global core coupled with sensitivity to regions and countries. In part two of our series on customer insight and behaviour change, we share our tips on optimising global customer research projects to ensure you get the balance right in an efficient way.
Blue Latitude Health