Paul Holmes 27 Mar 2011 // 7:01PM GMT
Let me be clear: I have no problem with the use of reverse auctions as a tool of the procurement process. If you need to purchase a large quantity of urinal cakes for the corporate restrooms, it makes sense to get them at the lowest price possible. Public relations firms, however, are not urinal cakes—and price is not the same thing as value—which is why it’s nice to see my partner Arun Sudhaman reporting on the decision by GlaxoSmithKline to select a firm for its EMEA medical education work via a “reverse auction,” an approach that encourages partners to under-bid each other in order to secure the business. I don’t see how PR agencies can participate in such a process and still hold onto their self-respect. At the very least, it seems to me that any firm that really believes all of its own statements about working as a partner rather than a supplier, about providing strategy as well as execution, about moving up the value chain, has to think twice about this approach. But not one of the PR agency sources we spoke to for our story was willing to be quoted on-the-record by name criticizing the reverse auction process. Self-respect is nice, I guess, but it doesn’t pay the bills. On the other hand, this is not just an agency problem. I have to wonder what this approach to buying PR services says about the corporate communications function within these companies. Would the chief legal officer countenance a reverse auction to choose an external law firm? (That’s a serious question, by the way. Are there companies that buy legal services or management consulting firms this way?) If not, is the fact that they get used in selecting PR agencies a reflection of the fact that senior corporate communicators don’t have sufficient influence, or that they don’t believe PR delivers sufficient value that hiring the best matters.