Pepsico move to drop marketing procurement department puts spotlight on the practice

Advertising Age has reported that Pepsico, one of the biggest advertisers in the US, has eliminated its marketing procurement department and shifted responsibility for agency and media oversight to its brand teams.

AdAge says “it could lead to significant changes in how Pepsi deals with its agencies as well as spark a broader conversation across adland about the value of corporate procurement departments”, one of the most contentious aspects of client-agency relationships around the world including Australia.

“Companies began creating centralized marketing procurement departments 10 to 15 years ago as a way to save money and get better return of investment on marketing functions such as agency activities. But procurement has been under pressure in recent years, not only from agency executives – who have long loathed it – but also from some marketers. An Association of National Advertisers survey from earlier this year revealed that only 47% of clients believed procurement added value, while only 10% of agency respondents said it added value to the client-agency relationship.”

Read the full article here.