Spending power

Procurement continues to be a thorn in the side of the events agencies. But a debate held at last month's International Confex aimed to take some of the pain out of the process. Claire Bond reports.

The underlying sentiment in the world of events is that procurement is here, and it's here to stay. As the responsibility for assigning marketing budgets moves away from marketing and sales departments and towards procurement officers, many event professionals are concerned that an emphasis is being placed on value for money rather than creative or strategic reasoning.

Regardless of this concern, it seems procurement is now embedded in client marketing strategies and therefore the need to embrace it is paramount.

Where procurement sits within event marketing was one of the topics thrashed out at a recent keynote panel debate held at industry exhibition International Confex, which took place last month at Earls Court.

Richard Waddington, chief executive of agency First Protocol, has worked within events and hospitality for more than 20 years. "I ask myself, what is a procurement purchasing officer's role within our industry now? Ultimately we can either fight it or we can embrace it," he said.

It seems the tentative relationship that exists between agencies and procurement departments has been borne out of little understanding between the two camps. Representatives within the events industry appear to feel that procurement officers are not always in tune with their needs and objectives. A telling sign of the current relationship was the resounding lack of procurement personnel in attendance at the Confex discussion.

"A lot of procurement officers are not showing much interest in the marketing world. They're not looking at the value added to a brand by the events agency, the production agency nor the creative execution. And how does one put a value on that?" continued Waddington.

Certainly procurement departments are not always well versed in each industry. Valerie Stevens is head of procurement at ATS Euromaster as well as director of the Institute of Travel Management. She agreed that knowledge of the industry within which procurement officers are operating needs to be integral. "When I first cut my teeth in procurement I was responsible for business travel. I didn't understand why there was a difference between purchasing events and conference services and ordering stationery.

I was applying the same basic strategies to both. But of course, there's a huge difference and that understanding comes out of an appreciation of the creativity and all the elements that go into it," she said.

It is a sticking point with agencies that they often require the support of procurement departments who, in turn, cannot demonstrate full understanding of both the message they are attempting to convey and the methods they employ.

Of course it is far too easy to make assumptions about procurement executives when personal skills play a big part. "You mustn't forget that, as in every other walk of life, there are good ones and bad ones," said Bob Rodwell, director of marketing procurement consultancy DWR. "A lot of the time, the question of whether the procurement manager will listen or come and talk to you is down to whether they are any good or not. There are those who just want to sit behind their desks and look at the numbers.

They do exist and they will never understand what you're trying to do.

What you've got to do is entice them out from behind their desks and say 'this is how we put together a package'," he added.

Enticing procurement departments to learn more about the industry is an important factor, however, Stevens commented that it is often the attitude of the purchasing departments - not the procurement departments - that causes the agencies to be more fearful and cautious. Procurement departments are in fact far more concerned with the overall picture. "With purchasing you have the need to define the transactional cost of everything. These are the stereotypical bean counters that want to know how every penny has been spent and see full accountability. In procurement we're more interested in the total end-to-end process and making a judgement on whether profit levels are reasonable," Stevens told delegates.

One vitally important factor in Stevens' line of work is to have full visibility of costings. This is the area where, she suggested, the parties often come to loggerheads as many agencies are less that willing to provide completely transparent costings.

One issue the entire panel agreed on was that value for money is the Holy Grail for procurement, with each department judged on how much it adds to the bottom line. This is not always simply about cost savings.

"At the end of the day the remit of either the purchaser or the procurement manager is to make savings for the company and to get value for money," said Rodwell. "Value for money is the tag-line on everything they do. It's not about saving costs because everyone within procurement is trained to look at value for money rather than cost. They appreciate that, when you're looking at services, if you cheapen everything you're buying a commodity. Value for money and return on investment are the reasons they live," said Rodwell.

It is not just agencies involved in this supply chain; venues also factor in the debate and are embroiled in procurement's quest for value for money.

Becky Graveney, sales and marketing director of Initial Style Conferences, commented that sometimes it is the venues that receive the raw deal in the equation. "I think we're probably bottom of the pile and venues are having to pay for some of the margins. While I totally embrace the fact that procurement officers are there to do an important job I think, from the venue point of view, some of the buyers perceive events as a commodity rather than extra added value," she said.

It's not all negative though. Event marketing is part of a larger marketing mix and, in the eyes of procurement, it does have its advantages. Rodwell noted that live marketing strategies have a more immediate effect so the analysis is also far quicker. He said that event marketing's short-term strategies may well turn the heads of procurement professionals because it is easier for them to quantify success on a short term basis in comparison to most above-the-line campaigns.

For some agencies, the involvement of procurement departments can be considered advantageous. Waddington, for instance, believed that the process often blocks out the smaller agencies who, by their very nature, can work for less but may not be able to offer longer term stability. "If it's a £20,000-£30,000 event then one man and his dog could run that from his living room. But if you're talking about a £200,000-£300,000 event, or an annual programme of events, the client has to know that they have an agency that is financially sound, that has a structure in place and has a team. They need that reassurance," he added.

The recurring observation during the debate was the need to be open minded and a willingness to research the industry. "Regardless of what it is that I'm buying it's important for me to sit very close to the brief and one of the things that I do with the marketing department is to sit down and understand what sort of event it is that they want to organise. It's the difference between allowing them to buy a Mini and a Rolls-Royce," commented Stevens.

"By going through the whole process I've then got full visibility. That doesn't necessarily happen at all times. If a procurement person comes in with blinkers on it's never going to be a win-win situation," she added.

However, she went on to say that the two sectors are now starting to work together and rationalise this expensive process.

The conclusion of the four panellists involved repeated calls for greater discussion and a standard practice within procurement. It seems headway is at last being made and this may be the beginning of a more integrated relationship. "I believe the situation that we're currently in is an embryonic stage of the development of procurement with the interface of our agencies," said Waddington. "In an ideal world we would work together on developing that relationship. The first phase is reactive, phase two of this has been pro-active - going and trying to sell to your clients. But I think the ideal world is an interactive relationship where we're working together in developing that idea and concept."

For an industry adept at providing hospitality services, building bridges may not be quite so easy as one would expect. Procurement officers are widely discouraged to accept hospitality and the process needs therefore to be a consultative one. One approach was mooted by Rodwell: "We need to go to procurement departments and say 'We need your help'."

It remains to be seen if these two worlds can work better together. But one thing is certain; procurement is now embedded in event strategy and needs to be addressed early in the process.

The final word went to Stevens: "Continue to communicate and work with marketing. But if you're pitching and you haven't got procurement on board they will take you back to square one. Make sure you get procurement involved early."

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