The big squeeze: Events in the age of procurement

Increased financial oversight and an ascent in the power of procurement have seen event spend under the microscope like never before. With events as lauded as the annual CLSA Investors Forum gutted, agencies competing on price instead of strategy and increased pressure to deliver transparent returns, how should event owners respond?

“As more companies have started to focus on consolidating their business travel and meetings spend, we have definitely seen a growth in participation levels from procurement departments for all M&E decision making and expenditure,” says Petrina Goh, business development manager, CWT Meetings & Events, based in Singapore.

“Twenty years ago procurement barely existed in Asia. Whilst some procurement professionals add significant value, governance and transparency to client and agency relationships, sadly many just have the mandate to cut costs often resulting in poor quality execution and a bad name for the craft.” —Ben Taylor, CEO, Project:WorldWide

“Increasingly, procurement has become the first and main point of contact for agencies during an RFP, with procurement also now becoming a larger part of the decision-making team when it comes to appointing an agency for events.”

Selina Chavry, global managing director, Pacific World, says successfully navigating this trend requires new thinking from event owners.

“One of the main changes that the increased role of the procurement department in decision-making brings is the way event planners need to prepare their proposals and present their budgets,” she says. “Event planners should expect and prepare to be able to reinvent the way they present their ideas in order to continue to curate the experience whilst providing the transparent pricing that procurement departments will be looking for.”

“It used to be the marketing or executive management who had the decision-making power for corporate events. Over the past few years procurement departments have gained power over the marketing department due to their ability to demonstrate significant budget savings. ... Even though most of the procurement department is under the accounting department, they can be open to meet with all the sellers and are invited as buyers to trade shows.” —Alicia Yao, managing director IME Consulting, Beijing and member of the SITE International Board of Directors

But event owners must be careful not to go too far, or risk devaluing their events entirely.

“A lot of the new generation of marketers in Hong Kong are very risk-averse and conservative, and they’ve gotten to those seats of power by demonstrating to their bosses that they can produce events for less money by driving down vendors on costs,” says Darren Kerr, founding partner, Factor168 Creative Event Company.

“Clients are so concerned about the risk that they drive the vendors down and do events that are less risky and not as creative. As a result, the event becomes unappealing, unimpactful and ultimately they don’t get the business result, so companies start thinking, ‘Events are not worth it’. It becomes a self-fulfilling prophecy.”

“It’s crucial to step away from the mind-set that procurement is the natural enemy of an agency. Instead, it makes better sense to spend a little more time understanding the client’s expected ROOs for any event that is being planned, in order to truly be able to deliver on their ROIs.” —Petrina Goh, business development manager, CWT Meetings & Events

Demonstrating business returns is an area the event industry has struggled to communicate effectively. Though Kerr sees ever-more impressive software continuing to emerge, he says the speculative nature of events makes it difficult to apply traditional ROI models and that a purely ROI outlook can distract from thinking about the purpose of the event.

“A lot of agencies have moved away from ROI and gone to an ROX (return on experience) model that's more experienced-based than purely monetary and I think that's a much better path to go down. Event owners put a fair amount of time into justifying the spend for the event, but they don't spend a huge amount of time putting strategic thought into why they're doing the event and how that event's going to look from an attendee point of view.”

CWT M&E’s Goh adds: “A decision-based team where each function within an organisation adds their expertise with the objective of a value-based result is the right approach. What is key for all companies is to invest in their meetings to ensure a positive impact to the attendees, the content which will ensure attendee engagement and results, and to create memories. The critical objective for a company is to always ask the question ’Why are we having this meeting?’ and ‘What is the return back to the company?’.”

“It is important to truly partner with your procurement organisation or client procurement organisation to educate them on the objective of incentive travel and why there are major differences—most of which are more expensive for the organisation. As many procurement professionals only see the world through a lens of cost savings and maximising spend, they need to be educated on the entire incentive travel lifecycle. We have found that when procurement professionals understand that the goal of the incentive trip is to boost sales or drive superior service they are more willing to partner with you on finding the perfect location for the winners and they feel as though they are part of the solution.” —Philip Eidsvold, SITE president-elect and director of client services, One10 Marketing, USA