Marketing Procurement Demystified
For many of our clients, marketing procurement is seen as one of the most challenging categories in the procurement industry.
To shed light on the true value of marketing procurement and future developments in this sphere, Sourcing Solved’s Managing Director Iain McKenna spoke to Annie Spilsbury, founder of The Marketing Procurement Company.
Marketing is one of those areas where stakeholders tend to believe they know all the answers; they have a preferred set of vendors and don’t want people to interfere in that space. How would you go about establishing relationships and credibility, and persuade stakeholders that you can add value?
“I’d start by listening to what the stakeholders are trying to achieve, which is normally getting their consumer to the heart of everything they do. In many ways procurement needs to start these relationships; not with trying to save costs but in fact improving the relationships that are already there with the suppliers. You need to be able to identify how you can service your customer internally i.e. your marketeer, to make their life better. If you go in on a cost reduction mission you’re going to fall over backwards.
That said, if for example I had a stakeholder who had a relationship with a high performing agency, if I then spoke to that agency they would have many ways that the relationship could be improved and made more efficient. If you can help that agency improve their relationship on a two-way street working with both parties, you will potentially be able to push costs down naturally, but you will definitely win the hearts and minds of the stakeholders.
Stakeholders have no appetite for the word ‘cost reduction’ and that’s important to understand. Essentially in marketing you are buying people: a connection moment with your consumer. As a marketing procurement expert, you’re aiming for the switching on of an emotion, and you can’t put a price on that; you certainly can’t drive the costs down on it. All you can do with that element of the relationship is to try and get those parties working so successfully together that the chemistry comes very naturally.
An example of marketing procurement working well is when there are issues with the relationship between agency and marketeer. The moment that there is a problem, rather than the marketeers having to do battle with the agency which can be quite destructive, it’s very helpful to have a marketing procurement person there as an intermediary who can deal with the problem on a commercial level, between the agency and the customer. In marketing procurement you find that you’re improving relationships, you’re listening to what’s going on, and you’re also trying to get the agency to be able to perform as well as they can without having to go into too much detail with the stakeholder. Once procurement is working with the agency’s commercial director, then the creatives and marketeers can get on with their jobs and the procurement people can ensure everything is running smoothly.
When managing agencies it’s also important to remember that if you have a top agency you’re working with, they need to attract the best talent by working with the best brands. But they also need to give their staff exciting opportunities to work on other brands and get promoted. Your objectives should be to keep the relationships as fluid as possible, so you can promote your agency people either within the relationships you have, or potentially to a leadership role such as Client Services Director of the agency, and that’s your success too. It’s not just about marketing, it’s about managing people and turning them into high performers.”
One of the common complaints about procurement is that it is all about price. What other levers can you use to drive value from marketing spend?
“There are three levels of marketing procurement to consider, and what is meant by value varies for each.
At the first level, you have an area that is good for those entering marketing procurement as a novice. This is your tertiary supply chain that has high volume projects, lots of suppliers, very little relationship with the stakeholders, and there is not so much emotion going into the buying. At this level, it often comes down to the price.
At the second level, you have medium term relationships, where there is quite a high level of projects. This enables you to change contracts at regular points if you want to change supplier, as there will be a high volume of players in the market who could deliver that service, for example sales promotion or ad hoc market research. At this level, there will be an element of price, but there will also be a degree of chemistry; you are trying to drive both innovation and value. The contracts will be longer and it may be harder to find suppliers.
Finally, at the top level you have primary strategic relationships, normally defined by long term contracts and strategic, integrated relationships with your organisation. This is where you want to drive high performance, and it’s also very difficult to change. For example, if you wanted to change Guinness’s creative agency, that would be an incredibly difficult process because you’re trying to find the right chemistry whilst making sure the brand doesn’t suffer in the meantime. The value procurement can add is around high performance relationships, data insights, evaluation; effectively anything that will give you invaluable information around how your brand is performing in the market place, and growing in comparison to your competitors.”
We hear a lot about Big Data in procurement at the moment. What does this mean in the space of marketing and what is the opportunity to use data to drive better decisions and more informed relationships?
Big data for me means two things: big data around your customer and brand, and big data around SAP and your procurement spend.
Procurement spend within the marketing sector is interesting because the marketing supply chain is currently set up around the ‘big six’ agency networks, offering skillsets across all the networks. A lot of organisations may look at spend and think, for example, ‘we spend £20m with Omnicom on media’ but they may not realise that globally they may spend another £100m on other services, whether it be on content, creative or video. Data is so valuable because from a marketing procurement perspective, looking at a marketing organisation’s data can give you insights about their activity that the stakeholders may not even realise. When you’re looking to negotiate on a large scale this can significantly change the way you go out to market.
Everyone uses the term ‘digital marketing’. The term ‘digital marketing’ originally meant consumed through a computer but due to the development of phones, tablets, flat screens but there is no such thing as digital anymore. We consume marketing communications across all devises regardless of historic technological origination resulting in marketing communications. The consumption of a media message or marketing content should be seamless, as should the planning of it. But because of data there is often a large influence from IT if they have originally evolved the historical ‘computer’ technology, so it is common that there is a disconnect in marketing, who may not own the relationships with the suppliers and agencies who are building and developing the technology interface. Much IT and data has become internal, and issues arise when you have whole departments who are trying to produce a seamless strategy, but who don’t communicate. With the growing importance of data, it’s even more necessary to align the functions so you can operate fluidly.”
We’ve heard a lot recently around the future of marketing procurement, with many organisations expecting their procurement teams to have less control over marketing. What would be your top three predictions for the evolution of marketing procurement over the next few years?
“There are three things I see that are already happening:
The large B2C brands will have in-house procurement capability, taking marketing in-house because they want to keep the data close to where they are, and they don’t want to be sharing that with third parties. Agencies are adapting to that by creating bespoke agencies for large blue chip companies. The question big brands are asking is: make or buy?
Coupled with this is a fight for talent because there’s not that much out there delivering the best of the best, and everyone wants to be working with the big brands. It’ll be interesting to see how agencies will keep attracting the right talent and keep the marketplace buoyant.
I also think that within marketing procurement there are a lot people in pitching and strategic work, and it’s starting to get quite saturated. That category of marketing procurement person will find it more challenging because marketing organisations are expecting more back now from where they are delivering in procurement.
I suspect marketing supply chain procurement will be more common, and that will be around third party disbursement spend, for example print and textiles. There’s also a new area of processing engineering, with the agencies and agency resources restructuring from ‘as was’ to ‘as is’. This is restructuring the organisation on both sides, the client and the agency, to integrate it into one seamless structure that will deliver the right marketing solution. I’ve seen a few companies developing this; it’s clever and it’s benefitting their customers. Looking at everything from a total end-to-end and then process re-engineering, it is a highly valuable way to look at procurement moving forward.
To wipe the slate clean and look at the perfect world and how it should be working; few organisations are doing that. But it allows you to become quick and powerful globally, but also be nimble on regional and localised adaptations and outputs, for example a franchise.
There are quite a few trends going on and marketing procurement needs to remember what we were originally trying to deliver: top right hand box performance which in a creative world is the consumer connection that changes people’s viewpoint of a brand and make them adore it. We’re trying to facilitate the relationships and infrastructure to deliver that as quickly and easily as possible. It’s not always about cost, and if it is then we’re really killing off our own industry.”
Annie Spilsbury is the founder of The Marketing Procurement Company, a niche boutique company that services marketing procurement requirements, analysing how organisations operate and improving both the relationships and the make-up of the supply chain.