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Smart Thinking blog

Insights and expert advice on the key issues facing today’s pharma marketer

Work together to deliver value

The idea of ensuring that procurement teams align fully with agencies and marketing teams is not simply a boring bullet-point in a manager’s conference presentation; it is a collaboration vital to successful marketing

Not too long ago, when agencies or marketing teams heard the word 'procurement', there would undoubtedly be a group moan while, across the table, the members of the procurement team would be rolling their eyes at yet another turgid agency budget with no clear return on investment (ROI).

Now, with the ever-changing economic environment, the demise of 'blockbusters' and shrinking healthcare budgets, it is essential that all parties recognise that they have the same goal and work together. And this is indeed what is happening.

Procurement evolution
There has been an evolution of pharma procurement over the last ten years, starting with the idea of 'buying in bulk', moving on to online auctions and, more recently, into more of a 'relationship' role between agencies and marketing teams, where all parties should have a joined up view to achieve the same aim. This is not universal, but the trend is towards full involvement with agency and marketing teams. Where this good practice is happening, it is translating to a better understanding of the role of the agency as procurement begins to recognise the value of good strategic and creative thinking and specialised support.

Agencies have also been changing and, although there is still a tendency to undercut the value of their own creative and strategic thinking to woo procurement with efficiencies on deliverables, there is a growing desire to focus on the core, most interesting and rewarding elements that add real value for the clients.

Full involvement
Marketing teams are not exempt from the tide of change and attitudes are shifting. Rather than just leaving procurement to get on with its job, it is essential for the marketing team to be fully involved, to ensure it gets what it wants and helps procurement to understand what it needs from agencies.

Interdependencies are growing and developing among agencies, procurement and marketing teams in order to deliver successful communications. But what does the evolution look like in practice and how do all parties work together through the process?

Start at the beginning
First there is the pitch brief; one of the first things received from a potential new client. Historically, there would be marketing objectives, an indication of budget and a little background on the disease area, perhaps. Members of the marketing and communications teams and maybe someone from the medical department would be at the pitch itself.

Now, more often than not, throughout the pitch process, the key contact is in procurement and this person also plays an active part in the selection process at the pitch. Furthermore, there is an expectation that, in addition to presenting some amazing, innovative, creative and 'blue-sky' ideas, a very detailed budget is left behind in order to 'better compare' what is to be delivered for the estimated cost. Plus, a framework for evaluating the effectiveness of the proposed ideas is also provided. This article is not about the pros and cons of pitching, so the usefulness of the overall exercise will not be debated here. Suffice to say, the 'team' consisting of agency, procurement and marketing is joined together from the beginning.

Agencies need to step up confidently and not undervalue the good strategic and creative thinking that is the most important foundation for future deliverables

Set foundations and goals
The pitch has been won and the winning agency has been contacted. Now is the time when key relationships are determined, budgets negotiated and goals set. Again, the procurement team is much more involved in the overall development of the programme and works with agencies and marketing teams to set benchmarking in order to better measure the success of a programme/campaign and therefore the ROI. This is the time to agree targets, goals and timing for formal appraisals for both the agency and marketing teams. At the heart of these first negotiations there must be a mutual understanding of 'value' and, while some agencies, marketing teams and procurement people view this as another word to mean cutting costs, others recognise it is about delivering good service at a fair cost, recognising that this is an investment for long-term, sustainable delivery.

There is no doubt that a key objective of procurement is to lower costs, but when looking at value, it should be about 'value created' rather than simply 'costs incurred'.

What really matters
When budgets and benchmarking are in place, agreed target deadlines and formal reviews have been set, it is time to take a step back and focus on creative and strategic thinking. There is still a tendency for agencies to view their core revenue stream as stemming from the 'basics' – press releases, ads toolkits, speaker programmes and other 'hard' deliverables. Agencies need to step up confidently and not undervalue the good strategic and creative thinking that is the most important foundation for all the future deliverables. The market expects, and craves, innovation and it is more important than ever for agencies to deliver smart thinking through innovative, integrated programmes that ultimately deliver good value to all.

Development and delivery
Just because budgets have been signed off, does not mean that the role for procurement is over. In a sense, procurement keeps both sides honest: yes, agencies need to address value and efficiency, but it is important to recognise that marketing teams also need to ensure efficiencies. It can be part of procurement's role to avoid extra agency costs by ensuring the in-house marketing team has the right players at the right time, making the right decisions. It is well known to all how looming deadlines can force forward movement on a project without proper processes being followed and without including the right decision makers. Rather than gaining, or saving, time, it results in a step back and higher costs. Once again, everyone has a role to play.

At every point, marketing, agencies and procurement are now linked together. While there may be some challenges as everyone gets used to this new way of working, all should be welcoming the evolution of the role of procurement and see these teams as new allies, working together to improve efficiency, creativity and drive strategic focus in order to deliver the value that is needed in today's challenging environment.

This is the future – will companies embrace it?

Article by
Matt de Gruchy

is CEO of Ogilvy Healthworld and a member of the European Association of Communications Agencies Healthcare Communications Council.

20th October 2011


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