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CIPS/IPA/ISBA publish Magic and Logic: redefining sustainable business practices for agencies, marketing and procurement

22 May 2006 -

The three leading associations for procurement, agencies and marketing, CIPS, the IPA and ISBA, today (22nd May 2006) published Magic and Logic: redefining sustainable business practices for agencies, marketing and procurement. The joint industry white paper identifies how the three parties can best work, both individually and together to produce profitable growth for all.

To view and comment on the white paper, please visit www.magicandlogic.co.uk

The white paper, which is the first published output from the joint industry Value Framework initiative, is the result of an extensive consultation by independent researcher Marilyn Baxter with thought leading practitioners from all three disciplines.

The report examines what the best practice agencies, marketing and procurement clients are doing right that results in business success and profitability for all. It shows how their working practices help them to produce ideas together and proposes how all practitioners can improve performance by following the lead set.

It identifies key issues for the industry collectively to address, such as the need for greater clarity of agendas, openness, integrity, professionalism, process, and efficiency. At the same time it calls for a radical rethink about the terms of engagement between agencies and clients when it comes to pitching, remuneration and intellectual property.

Messages to Marketing: how to help Agencies produce profitable ideas
Marketing are encouraged to develop long-term relationships with a group of agencies for the most effective ideas, and not to take the decision to pitch lightly. Marketing are also urged to be more open about business objectives with agencies to enable greater creativity, take greater responsibility as relationship managers and project directors, and be more willing to invest in measuring effectiveness. They are challenged to improve their budgeting and scope of work planning process and tie payment by results more closely to objectives.

Messages to Agencies: how to make a profit from producing profitable ideas for clients
Agencies are encouraged to stand up to their clients more, to stop giving ideas away for free, to stop undercutting the competition to win unprofitable new business.  In parallel, they are challenged to articulate better the value of production services, to lead the charge on measurement and evaluation, to increase their professionalism, and to think of ways to restructure their business model to secure greater client-agency trust and be remunerated according to the true value of what they contribute.

Messages to Procurement: How to contribute more effectively to producing ‘profitable ideas that make a profit’
Procurement are encouraged to play a pivotal role in ensuring ‘fair play’ between all three parties; to get tougher on marketing to deliver more professionally, provide a remuneration framework which rewards quality and creativity, and to look for ways to work with agencies to help them be more efficient. Procurement are challenged to develop their understanding of the agency marketplace and the linkage between the input, output and outcomes of business value creation, and to be more open about their agenda.
 
Magic and Logic content:

What differentiates profitable and successful agencies from the rest?
What are the rewards for agencies that operate best practice?
How do the best marketing people contribute to their agencies ’ producing profitable ideas?
How do the best procurement people contribute to their agencies producing profitable ideas?
Key conclusions: What is required for the future?
Some signature practices of the most profitable agencies
How profitable are agencies?
Organisations interviewed

Said Michael Campbell, Business Development Director, CIPS: “This report is a real landmark and step forward for all those professions involved. The work of the Value Framework is testament to how collaborating across professional boundaries can produce some solid and valuable results. CIPS believes that the area of the procurement of marketing services is not only, one of growing importance for organisations, but also, one where procurement professionals can further contribute to the achievement of organisational goals and objectives.”

Said Jerry Hill, IPA Value Steering Group representative and Group Chief Executive, Initiative: “This report is a milestone for the industry - it has challenging advice for agencies, marketing and procurement and a big idea in 'Magic and Logic' that can lead us forward. The communications industry at large is going through a revolution driven by digital technologies. This report throws valuable insight into how we can all manage the transition through this period of dramatic change. There are very few facets of what we do that are not impacted by these developments and, like a creeping vine, the imperceptible daily change can only be understood if looked at from a distance which we have attempted to do. All three stakeholders must embrace new behaviors and new relationships if the enormous potential of this new environment is to be exploited.”

Said Peter Buchanan, Deputy Chief Executive, COI, ISBA Executive Committee Member: “The holy grail is to find the contribution that advertising creativity can make to company profitability. This report helps us to map the route and at the same time encourages agencies to consider how they can improve their own profitability by being more efficient.”

end

Note to editors:

Value Framework initiative
The Value Framework initiative was launched in September 2004 by CIPS, the IPA and ISBA. It had an ambitious purpose: to improve professionalism in ways of working between all three memberships, through the development of an industry framework for relationship management and contract negotiation. The Steering Group was formed in October 2004 and held its first inaugural meeting in January 2005. It has met quarterly since, rotating both meeting venues and chairmanship to fairly represent the interests of all three parties.

Marilyn Baxter, Author of Magic and Logic
Marilyn Baxter has spent over 30 years in advertising planning and research. She recently retired as Chairman of the advertising research specialists Hall & Partners, and before that spent 15 years at Saatchi & Saatchi, where she was Vice Chairman and Executive Planning Director. Currently she is a Non Executive Director of the COI. Whilst in the advertising industry, Marilyn served on the IPA Council and was Chairman of the Value of Advertising Group. She is a frequent writer and speaker on the advertising industry, research and planning, and was the author of the first IPA report on ‘Women in Advertising’. She is a Fellow of the IPA, a full member of the Market Research Society, and an honorary member of the Account Planning Group.

CIPS
The Chartered Institute of Purchasing & Supply (CIPS) is the leading international body representing purchasing and supply management professionals. It is the worldwide centre of excellence on purchasing and supply management issues. CIPS has approximately 40,000 members in 134 different countries, including senior business people, high-ranking civil servants and leading academics. The activities of purchasing and supply chain professionals can have a major impact on the profitability and efficiency of all types of organisation.

IPA
The IPA is the industry body and professional institute for UK advertising, media and marketing communications agencies. It was established in 1917 as a servicing body and to negotiate on behalf of its members with media bodies, government departments and unions. Its 250 corporate members represent the major part of the advertising agency business, handling advertising with an estimated value of some £13,000 million per year (over 80 per cent of advertising placed by agencies) on behalf of their client companies and organisations nationwide. (note this figure is based on 2005 Advertising Statistics Yearbook figures and excludes classified and television production costs).

ISBA
ISBA is the representative body for some 380 UK advertisers whose combined spend on marketing communications is over £10 billion per annum.

Value Framework Steering Group, Magic and Logic spokesmen

Marilyn Baxter, Author, Magic and Logic, 020 8940 8040

The Chartered Institute of Purchasing and Supply (CIPS)
- Alison Littley, Global Marketing Procurement Director, Diageo, 020 7927 5200: PA Sylvia Mitchell
- Michael Campbell, Director of Business Development, CIPS, 01780 756777
- Gerard Chick, Head of Knowledge Management, CIPS, 01780 756777

Institute of Practitioners in Advertising (IPA)
- Jerry Hill, Group Chief Executive, Initiative, Chairman, IPA 5 Year Plan Forum, 020 7663 7000, PA: Steph Black
- Jane Asscher, Chairman and Managing Partner, 23red, 0870 0130 023
- Hamish Pringle, Director General, IPA, 020 7201 8209
- Janet Hull, Head of Marketing, IPA, 020 7201 8253

Incorporated Society of British Advertisers (ISBA)
- Nick Smith ,Chairman, Marketing Society, ISBA Council Member 01753 886 814
- Simon Thompson, European Marketing Director, Motorola, ISBA Executive, PA: Lucinda Vayle, 01254 790550
- Peter Buchanan, Deputy Chief Executive, COI Communications, ISBA Executive, 020 7928 2345
- Debbie Morrison, Director of Membership Services, ISBA, 020 7291 9020

For further information:
ISBA, www.isba.org.uk, tel: 020 7291 9020
CIPS, www.cips.org, tel: 01780 756777
IPA, www.ipa.co.uk, tel: 020 7235 7020

The European Association of Communications Agencies (EACA) is a Brussels-based organisation whose mission is to represent full-service advertising and media agencies and agency associations in Europe. EACA aims to promote honest, effective advertising, high professional standards, and awareness of the contribution of advertising in a free market economy and to encourage close co-operation between agencies, advertisers and media in European advertising bodies.