Can marketers and procurement work together harmoniously?

Posted on  |   by Patrick Murphy

Someone asked me recently ‘if you were a marketing director would you let procurement near your budget?’ The fact that I needed to deliberate my response, motivated me to weigh out the pros and cons.

So, from my own experience, I have captured the reasons why I would or would not want procurement involved in helping me to manage my budget if I was in a marketing role.

There still seems to be a big divide between marketing and procurement, and we frequently hear rants from both sides. Procurement people look for a return on investment and a measurable outcome. Those proposing the budgets on the agency side, tend to operate on a completely different set of parameters. Then the marketing manager finds him or herself somewhere in the middle. So it is hard to find a mutually beneficial agreement when approaching this topic.

Here are some reasons, why you would decide not to have procurement help you:

  1. It’s my budget. I want to spend it how I choose.
  2. Procurement people aren’t qualified judges of creativity nor do they have a deep understanding of the creative development process.
  3. Procurement people just want to cut costs.
  4. Procurement will upset my agency and supplier relationships.
  5. Procurement does not report into me, and even with a dotted line, who is their loyalty really to?
  6. Involving procurement adds time to the process.

As a marketing person you only have one real KPI; growth. An interesting stat I learnt when I was at Procter & Gamble (credited to you Mr Phillipson) was that if you devote time working with your agency partner to build the effectiveness of the work by only 1% percent, that could cover a large proportion of your overall production costs. Surely then it is better to dedicate time building agency relationships and aligning your marketing KPIs to commercial objectives.

However, can I have my cake AND eat it?

cake

Whilst writing this, I remembered some of the great marketing procurement people we often have the privilege to work with. You all know who you are and will recognise yourself below I’m sure.

I believe that marketing and procurement can co-exist and collaborate brilliantly; however, the ingredients all need to be there for a successful relationship. I like the quote from Marks & Spencer’s head of procurement Claire Thomas, who says that procurement should act as a ‘neutral party between agencies and marketing which allows both parties to vent.’ And perhaps we can expect to find more amicable relationships between different stakeholders in the future. Industry leaders such as Coca-Cola as well as Procter & Gamble have replaced hourly rate proposals with the value-based billing model; which will help to put an end to confrontational bartering once more brands follow suit.

To facilitate a harmonious relationship, procurement need to co-operate with marketing people, who can highlight the intricacies associated with buying marketing services. Sometimes we encounter procurement people who disregard such knowledge, meaning that they try to do RFPs and initiatives on their own without much consideration of the soft measurements such as calibre of creative talent, chemistry, understanding of the brand equities etc. The marketers are the subject matter experts, and spend most of their working lives trying to understand an ever increasing number of channel specialisms; so their expertise is essential to the optimisation of commercial activities. Meanwhile procurement people are needed to ensure that a brand’s capital is not squandered without a clear return, enforcing this in a firm but fair manner. Marketing procurement heads who know that they do not have the deep knowledge of the various disciplines rightly seek support from companies such as ours to help them. It can take a lifetime to learn just one subject area; mine is broadcast production, but I certainly still do not know everything. It would be impossible for someone in procurement to do it in a matter of weeks, months or even years.

Value, as we know, is only what somebody is prepared to pay for something. And that is most definitely applicable to creative talent. The best marketing procurement people realise that and help to make sure great creative output is remunerated fairly. So what are the characteristics of the best marketing procurement people?

Pat’s top 10:

  1. Quick to put their hands up when they do not understand something.
  2. Understand the value of the knowledge and experience that marketing have and incorporate this into their activities.
  3. Eager to learn about the creative development process and production.
  4. Reach out to experts who can give them guidance and help them deliver their goals.
  5. Want the same KPIs/ mission as their marketing colleagues.
  6. Are respectful of all relationships with agencies and suppliers and internal stakeholders.
  7. Are quick to respond to emails and phone calls.
  8. Provide constructive feedback to suppliers and agencies who do not win business.
  9. Have a respect for the creative product and know that sometimes it is worth paying more to get it right.
  10. Remember that the best and most productive relationships are built on chemistry. Guaranteed the agency and suppliers will work harder if they like you.

hands

So once you have found a procurement person who demonstrates the above, a job of marketing director is to be absolutely clear about the objectives, expectations, and in what form you expect communication. Then let ‘em loose.

If they find efficiency and savings in areas that do not impact negatively on creative output, then that can be reinvested where it can work harder. That might be in media, or on screen – better music, talent, director/photographer, or even more versions.

Unfortunately procurement has a bad name for itself within the creative industries. However, they aren’t all bad apples and it’s up to you to make your own mark. Our ex ABI marketing procurement head Brett Colbert has taken the procurement function and made it ‘cool’ through his collaborative ‘rock procurement’ approach for MDC Partners who were brave enough to allow him to be client facing for this very creative agency group. Marketers and procurement need to work with each other, rather than against each other, in order to maximise the value of creative output.

 

Here’s some interesting further reading:

http://www.supplymanagement.com/analysis/features/2013/the-10-habits-of-highly-effective-marketing-procurement-managers

http://www.cips.org/Documents/Membership/PPT1098_magic_and_logic.pdf

http://adage.com/article/news/procurement-execs-clients-anymore/230984/

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