The Reverse Auction.
I’ve been on a tear this past two weeks, engaging in some really provocative and thoughtful workshop discussions with a number of clients. A big topic of conversation has been the state of the RFP (request for proposal) process in the digital world. There’s a tremendous amount of grumbling and dismay, but also a sense of resigned inertia: “I hate it but can’t figure out how to get away from it.”
For media companies — publishers, site owners — the first step to creating an organizational strategy to deal with RFPs is to look at them in the plain light of day and see them for what they are. The RFP as administered by countless digital buyers is a Reverse Auction.
My premise here is that the “smart, sexy money” is spent early in the marketing cycle. This is where strategic ideas and big deals are born. Once that money is gone — much of it being spent at premium prices — the Reverse Auction begins. The agency buying team is charged with executing a plan that meets very specific financial and results criteria. The “have nots” — those sites and providers who have not had a bit at the apple yet — are given a ridiculously short window (where there will be little-to-no buyer interaction) to provide their very best prices and value adds. This part of the process is designed to generate a sense of fear among the sellers, and thereby extract the best possible prices. They are in effect “bidding down” the average cpm of the plan. Hence, “Reverse Auction.”
A cynical spin on my part? Perhaps a bit. If you’re not going to go this far, at least grant me this: The “P” in RFP actually stands for “Price.” So start dealing with them on the basis of that reality, and stop bankrupting your sales and creative talent by going into full creative mode every time an RFP hits the in-box. Once you evaluate how many of those 48-hour “big idea” requests actually ever come to fruition, you realize what a fools game they really are.