Why Marketing Procurement Needs to Ditch the Rate Card Obsession

Focusing solely on agency rate cards can have a detrimental impact on the quality of an agency’s work and their ability to invest in talent and capabilities. Instead, procurement should aim to collaborate with agencies to understand their business challenges and find ways to deliver better value for both parties.

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Fixating on agency rate cards often leads to a commoditisation of the agency's offering, where the focus is purely on driving down hourly rates. This can result in less time for creative teams to dedicate to projects, ultimately impacting the quality of the work produced. Additionally, it gives agencies less scope to invest in training, sourcing top talent, and developing innovative solutions.

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Rather than this more adversarial approach, marketing procurement should seek to understand the agency's cost structure, profitability challenges, and business model. By gaining these insights, they can identify opportunities for collaboration that benefit both sides. For example, for agencies working on project-based work, there are often peaks and troughs in employee utilisation. Procurement could explore ways to utilise this downtime for non-deadline specific projects, ensuring the agency's talent is fully leveraged while also delivering additional value to the brand.

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Through open communication and a shared understanding of each other's needs, marketing procurement and agencies can develop pricing models that incentivise the right behaviours and align expectations. This could involve performance-based fees, output based pricing, or other structures that move beyond the traditional hourly rate approach. The key is to focus on the value delivered, not just the cost. By adopting a more collaborative mindset, marketing procurement can help agencies invest in their people and capabilities, ultimately leading to higher-quality work that drives better results for the brand. This approach benefits both parties and fosters a healthier, more productive relationship.