Marketing Procurement study generates Insights & Actions

Overview

A recent study of procurement industry professionals has generated some interesting insights into the evolving relationship between marketing and procurement professionals and helped to identify actions both sides can take to improve marketing ROI.

The survey of 303 procurement executives commissioned by the George P Johnson firm generated 10 insights into the marketing procurement discipline and recommended actions to improve relationships, performance and ROI.

For me the insights and recommedations make a lot of sense - viewing the marketing / procurement relationship as a partnership where both parties understand and respect each others role (and the value of the marketing agencies) and how all 3 parties work to deliver value to the organisation is emminantly sensible. 

Ten Top Insights

1. Procurement influences - but does no control - management of the marketing spend categories. This is not likely to change.

2. Even modest levels of collaboration between marketing and procurement can result in substantial cost savings and/or improvements to marketing spend effectiveness.

3. Plenty can be achieved via greater collaboration between procurement and marketing functions.

4.  Top-level executives believe there is greater collaboration between procurement and marketing than there really is.

5. Much if the tension between marketing and procurement could be alleviated with greater alignment of functional objectives, communication, cross-functional education, and earlier timing of collaboration.

6.  The earlier procurement gets involved in discussions and strategic planning for marketing spend, the more it believes it can positively influence marketing spend in coming years.

7. Marketing budgets are as likely to in increase as they are to decrease in coming years. The direction hinges on how well marketing documents its ROI. Procurement can help!

8. Procurement professionals value the right things in agency relationships.

9. While procurement may be emphasizing more discipline and structure in competitive bidding among marketing agencies, there is no long-term objective to increase bid frequency or otherwise destabilize the relationships between marketers and their agencies.

10. Ultimately, procurement professionals - especially senior level - want to see more business concentrated with fewer, high performing marketing agencies and service providers who will serve as long-term partners.

The study then went on to define recommended actions which can be taken by C-level executives to improve the performance of the marketing procurement relationship, a sample of which are presented below

Recommended Actions

For C-level executives

• Understand that substantial enterprise value can be achieved by fostering collaboration between marketing and procurement
• Review functional objectives and reward systems; eliminate conflict and inconsistencies
• Provide real incentives for collaboration
• After the easy wins, consider investing in upgraded systems for contract management, performance management, etc

For procurement executives

• Emphasize the value of the procurement skill set, risk management, performance metrics, negotiation
• Emphasize spend effectiveness over cost savings / budget reductions
• Alleviate marketing partners' fears about losing control over critical decision making
• Focus on working with brand and agency side marketers to design working models for measuring marketing spend performance & effectiveness
• Help to educate marketing about procurement disciplines 

 For brand-side marketing executives

• Create a framework for procurement that focuses on its strengths: contract negotiation and administration, ongoing structured reviews, etc
• Invite procurement to the table in more areas, e.g. agency performance reviews
• Invite procurement to the table sooner
• Take time to educate procurement about marketing

For agency-side marketing executives

• Consider new compensation models; collaborate with procurement and brand-side marketers to design models that reward performance effectiveness / improvement
• Communicate with procurement if/when its actions affect your costs

Author: VJ Ratnam (Decideware)