It’s now almost 5 years since the IPA, ISBA and the Chartered Institute of Purchasing and Supply published Magic and Logic: ‘re-defining sustainable business practices for agencies, marketing and procurement’.

It’s a great publication recognising that some of the things agencies do really add value to a client’s business: ‘Magic’ – creating brilliant ideas from clever thinking as a starter – and that these should carry a premium price; and that some of the things agencies do are more administrative functions: ‘Logic’, which need to be paid for – but shouldn’t carry a premium price.

It’s also full of laudable proclamations: ‘Make procurement your ally not your enemy’; ‘a weak agency trades on price. A strong agency has confidence in its ability to deliver and stands firm’; ’unite for win/win’.

But admit it – the relationship with procurement departments is rarely good – perhaps because we don’t really understand each other’s goals – perhaps because we haven’t changed the way we do things.

At an IPA event to launch Magic & Logic a guest speaker – the procurement manager for a brand leading High Street chemists, attempted to justify why it was acceptable for clients to ask agencies for creative proposals without payment when pitching for business. – I admit my first thought was next time I have a headache I’ll pop into the local branch – take an assortment of remedies – and then go back and pay for the one that cures me at a later date.

On reflection, I started to get annoyed that at the precise moment we were talking about the added value of thinking and creativity – the procurement professional was advocating that agencies give away Magic – it didn’t make sense then, and it doesn’t make sense now.

Sadly I don’t see much change these days – agencies still give away the ‘Magic’ and try to make up their fees on ‘Logic’ – we’ve got it the wrong way around.

Perhaps a way forward is to learn better how to work with procurement – here are six thoughts:

1. Don’t underestimate the experience of procurement in buying marketing services – they don’t just buy paper clips and staplers, many are former marketing professionals – both client and agency-side.
2. Understand their objectives – inevitably procurement will specify the KPIs for a campaign – they also have their procurement  KPIs – ask what they are and negotiate in such a way that it helps them achieve their goals.
3. Use a procurement expert to advise you – to help you negotiate –procurement professional to procurement professional. Some clients use procurement to distance themselves from the ‘difficult money’ questions – use experts to give you an objective perspective.
4. Make sure you know what a successful campaign will look like and how will you will measure success – think about sharing the risk and getting rewarded for exceeding your goals.
5. Think about  your agency remuneration model – ask yourself about the relevance of set hourly / daily rates given that sometimes you might be spreading ‘Magic’, sometimes administering  ‘Logic’.   Make sure you get handsomely paid for Magic – for ideas and thinking which builds your client’s business
6. Measure your agency revenues by Magic and Logic and a place a focus on increasing the proportion of your revenue generated from Magic.

Procurement teams are likely to increase in importance as businesses feel the squeeze and need to justify marketing expenditure and demonstrate value to their finance directors – not the cheapest but the added-value for money – and we’d better learn to embrace them effectively.