How Marketing And Procurement Can Work Towards The Same Goals
There is a fundamental question that anybody obtaining marketing services has to grapple with – do you want them cheap or do you want them to be good – but a new report from the WFA seeks to flesh out a theory of value to end the savings-focused race to the bottom.
The World Federation of Advertisers explained in a statement that this report was the result of two years’ research into procurement best practice at some of the world’s largest firms, as part of Project Spring, which seeks to bring about “a revolution in marketing procurement.”
It follows the finding in 2018 that 92% of the Federation’s community felt that the way marketing procurement was perceived by the wider organisation needed to be improved, despite the relative youth of the 25-year-old discipline.
“The future of sourcing is in adding value beyond savings. It should be not just a business partner that shares objectives with colleagues but also a source for growth within the organisations”, says Laura Forcetti, Marketing Sourcing Global Lead at WFA. “It can only be these things if there is a shift from a primarily savings outlook to a value creation approach.”
There are four key elements to the WFA’s new value-based approach:
The process should aim to increase interaction between marketing and procurement teams. Around half of procurement teams don’t get involved in anything worth less than $75K, but increased visibility also helps boost the wider business’s recognition of the value that marketing can bring by virtue of seeing them involved.
Who procurement reports to matters. Half of marketing procurement teams report into Supply Chain and 34% report into Finance, with some research showing that the latter are less likely to be seen to be providing value. However, as organisations become more cross-functional and reporting lines blur, companies that train all stakeholders to understand what the marketing function does leads not only to better understanding but to more ambitious investments.
How you measure performance has an effect on the effectiveness of both marketing services and the team that procures them.
There remains a significant reliance on cost reduction and cost avoidance as core metrics, while more useful metrics such as contribution to topline growth, or the development of a long-term relationship with an agency are less prominent. As a result, the report advocates bridging the gap between marketing and procurement metrics so that they both serve the same goal. A changing understanding of what agencies are and what a good one looks like. “Agencies are not simple vendors; they are an extension of the internal marketing team and can have an important impact on the company’s business KPIs.” Having a top agency working for you, made up not only of extremely talented creatives and planners but also a solid, effective management structure is clearly important – a focus on savings tends to miss this until it’s too late. Colleagues in marketing need to know that procurement understands this, that they are both driving toward getting the best out of their agency partners.