What Goes 'Round ...

There's an old saying: "If you live long enough, you see everything -- twice." I thought of that adage a lot these past few months while reading Advertising Age. First, though, some background. In July, Procter & Gamble announced that the duties of its retiring VP-global media and communication would be split between Dina Howell, P&G's former shopper marketing chief, and a senior purchasing executive. The big news for a Shopper Marketing magazine editor was the elevation of Ms. Howell, who was honored by the Institute in 2006 as an in-store marketing Hall of Famer, to an $8 billion job with the imposing title of VP-global media & brand operations. Symbolically, at the very least, it represents significant new career path possibilities for anyone involved in shopper/in-store marketing. She has, in a manner of speaking, broken through a "corrugated ceiling." But I also noticed that in Ad Age's coverage of the story, its writers' primary angle was that "the move appears to give purchasing a bigger role in marketing services." Upon reading related articles, I discovered a lot of free-floating anxiety at agencies about the rising power of their clients' procurement departments. In the June 22 issue, for example, Jonah Bloom, the magazine's editor, worried that procurement departments are beginning to treat "creative executions... as widgets that can always be made more cheaply elsewhere." This "commoditization," he added, is potentially "the biggest threat facing agencies and media companies today." Some examples of the procurement department abuses [none of them, I want to make clear, are by P&G] noted in various articles and blog postings included:"Outlandish" 300-question RFPs in which only a handful of questions actually related to marketing; Client demand for an "insanely detailed breakdown of costs;" Intrusive inquiries into agency staff and executive compensation; Pressure to create standardized costs schedules for even highly customized services; Payment terms that are so stretched that agencies "feel they're being treated like credit lines; RFPs that not only go to 10 or more agencies, but to agencies that may not even be qualified to do the work listed; Suspicions that some agency reviews won by an incumbent were primarily exercises in price recalibration. I'm going to pause here -- for a moment -- so that any senior P-O-P company execs, veteran CPG merchandising managers and display design directors reading these bullet-pointed items can let out a collective sigh of recognition.The shock of recognition that I just referred to is this: Virtually every one of the client abuses listed above -- and a number of even nastier* ones -- were identified almost five years ago during a series of meetings chaired by the In-Store Marketing Institute. Those sessions culminated in an influential white paper, "P-O-P and RFPs: Best Practices in Sourcing In-Store Marketing Programs." The good news is that many of the excesses identified in that document have moderated over the years, and for a lot of reasons. Some of the people mandating those unwieldy and intrusive RFPs realized they were more administrative hassle than they were worth. Some of the people forced to fill out those insanely detailed cost breakdowns realized they weren't actually being read all that closely. When some of the impossibly low-bid suppliers inevitably screwed up on some major campaigns, there were costly do-overs, rollout snafus, and heads that rolled. Eventually, some of the most highly regarded P-O-P producers simply "went Nancy Reagan" on the most onerous RFPs: They just said "No." The bad news: Pricing pressures really never just go away. The shopper marketing discipline is only beginning to truly integrate all levels of marketing, aligning objectives from the top of organizations down to the folks executing campaigns in-store. While we're used to seeing systematic cost pressures pushing up from the tactical side of the equation, it's surprising to see them doubling down from the strategic side as well. And it's got to be a little unnerving to be among the disciplines -- retail researchers, insights providers, digital media firms, etc. -- that may eventually be caught somewhere in the middle. *The most abusive being certain "online reverse-auctions" in which the bid price not only dropped well below everyone's wholesale material costs, but long after the last known bidder had withdrawn, lower and lower bids continued to appear on computer screens.Bill Schober is editorial director of the In-Store Marketing Institute. He can be reached via e-mail: bill_schober@instoremarketer.org or phone: 847-675-7400 (ext. 132).

What Goes 'Round ...

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