The relationship between marketing and procurement has traditionally been fractious © Pakmor/Shutterstock
The relationship between marketing and procurement has traditionally been fractious © Pakmor/Shutterstock

How procurement can add value to marketing

Relationships between marketing and procurement are not always easy. But it doesn't have to be this way: procurement can add real value to its marketing colleagues

Procurement professionals are boring, normative squares who kill creativity. Marketing are fluffy, airy-fairy types who wouldn’t understand commerciality if it danced naked in front of them. Sound familiar?

The relationship between marketing and procurement has traditionally been fractious, says Traci Dunne, consultancy manager at advertising membership body ISBA. That’s not surprising, given the stereotyped views and inherent differences between buying commodities and creative services.

“I can see how marketing could see procurement as dampening creativity, as some [procurement people] can be process jockeys,” acknowledges Louise Clark, director of sourcing and procurement, EMEA, at marketing group IPG. Gillian Smith, procurement and commercial manager at energy company SSE, adds: “Procurement has traditionally been seen as a roadblock by marketing: a process-driven, inflexible, saving-focused function that causes unnecessary time delays.”

On the other side of the fence, Andrew Stephen, L’Oréal professor of marketing at Oxford’s Saïd Business School, agrees the “lack of concretes” in marketing can be a source of tension. “Marketers need to start getting more accurate with measurement and do a better job of making their case,” he says.

“The perception is that marketing and procurement don’t talk the same language, which is true if both play to their stereotypes: procurement as process-driven and marketing as only being interested in the soft stuff,” says Smith. But it doesn’t have to be this way.

It’s been more than 10 years since CIPS, ISBA and the IPA (Institute of Practitioners in Advertising) published the ‘Magic And Logic’ report, to improve partnerships between marketing, procurement and media agencies. “The recent addition of procurement into the agency/marketing relationship has sometimes been a difficult one,” the report said.  

A decade on, there is a certain amount of “grudging respect” between the two professions in most businesses now, believes Dunne. She has noticed a rise in procurement people being on board from early pitch stage as “a real asset”, and in a few exemplary cases procurement is “totally embedded”.

Marketing procurement consultant Tina Fegent concurs: “There are more marketing procurement people, there are more good ones, and agencies are more accepting of the need for the role.” And recent statistics from marketing services consultancy AAR Group found 75% of organisations surveyed had a procurement individual or team in charge of procuring marketing services. Although Pepsi made headlines by scrapping its marketing procurement function in 2015, there have been very few examples of other businesses following suit. “Agencies should be careful what they wish for,” Dunne says. “If there’s no procurement, there go rosters, contracts, bonus terms… All the stuff that gets done on a day-to-day basis is done by marketing procurement.”

All the more reason, then, for the two not just to get by, but to get along. After all, as Smith points out, they have the same overarching aims and responsibility – to deliver value to the business, shareholders and customers. “It’s results through collaboration,” she adds.

Encouragingly, AAR’s research also points to stronger marketing capability among procurement professionals. Some 83% of marketers said procurement was more knowledgeable about marketing services than two years ago, and 86% said commercial decisions were more efficiently handled when procurement was involved – a big jump from 72% two years ago. Headlines in the marketing press appear to support this. Compare ‘Is procurement killing marketing creativity?’ from 2010 with 2016’s ‘Why procurement must be marketing’s new best friend’. “It’s not about seeing procurement as a third wheel; they are very involved,” says AAR managing partner Vicky Gillan. “The best way to ensure marketing and procurement can get along is to have an ongoing relationship, rather than procurement just being the bad cop.”

That ongoing relationship is critical, the marketing and procurement professionals SM spoke to agreed. “There is a trust issue that needs to be broken down by working together,” says Richard Woodford, global procurement category director for marketing at education firm Pearson. “Procurement is sometimes seen as a transactional function trying to engage in a strategic agenda. The reality is we have a great deal to add and if partnered can achieve great things.”

Something as simple as rethinking seating arrangements can help build such a relationship. David Little is regional category manager, marketing procurement, at Swedish food company Lantmännen. By sitting with the cross-company marketing team, he maintains strong relationships and catches any potential issues early. “Ask to sit more closely,” he advises. “We have to uncover the problems ourselves and show people how things could be improved, without making anyone feel guilty.”

Embed yourself in the subject by getting out there and talking to marketing stakeholders and agencies, he says. “Speak to people high and low.” In monthly information-sharing meetings make a concerted effort to be “balanced” and get beyond the “police aspect”. Building trust can allow procurement to play devil’s advocate when marketing needs challenging, he adds.

Smith regularly attends learning lunches and marketing training sessions. “This not only feeds my interest but lets marketers see I want to understand their perspective,” she says. “My willingness to talk their language encourages them to try and talk mine, and the language barrier is slowly broken down.”

Woodford is a fan of the ‘magic and logic’ analogy (if you foster and nurture the magic and drive the value through the logic, then all sides win). Procurement’s use of processes can add much needed structure to marketing.

“A lot of marketing managers are keen on the creative side but not on the numbers and measurement,” agrees Little. “That’s a foot in the door for me, as I love numbers. Marketers like [procurement] to give structure.” He cites briefing templates, performance-related incentives, ‘relationship auditing’ and bonus criteria as important examples. When staff turnover is high, as it often is in marketing and advertising, processes are particularly important to ensure nothing falls through the gaps as projects change hands. Procurement can also teach its marketing peers discipline and negotiating skills, IPG’s Clark believes. “I’ve had to unpick contracts that were based on a nice chat,” she says. “The discipline around negotiation and commercial decisions between marketing and the client is where things can get muddied. Procurement can steer it through more clearly.”

Media agencies can be notoriously vague when it comes to explaining how money is being spent. According to one unnamed marketing procurement head at a major consumer brand: “The big issue is transparency. What is procurement doing to ensure it has the forensic evidence to ensure the company isn’t being diddled?”  
Saïd’s Andrew Stephen says this is where marketers can learn to think more strategically and “like a non-marketer”, clearly linking spend to business objectives and ROI. Only 27% of marketing spend is currently measured in terms of return on investment, according to research by Charterhouse.

And procurement should be understanding that measuring creative delivery can be more abstract, and support marketing colleagues to think of other ways to assess intangibles. “Strive not to be a factor that increases uncertainty, but a good business partner who will keep things in bounds, with a degree of flexibility,” he advises.

With marketing departments under pressure to deliver savings – advertising giant WPP has predicted a £220m decline in ad spend due to Brexit – helping with cost is a quick win. But the conversation needs to move to value if procurement is to wield more influence in marketing. As Ian Sullivan, senior consultant at marketing procurement consultancy Reforma Consulting, points out: “Marketing know they can’t go off and spend lots of money. Those days are over.”

ISBA has just launched its Value Beyond Savings project, encouraging marketing procurement professionals to think more maturely about cost and value. “There are ways procurement can continue to deliver value to the business that are not associated with cutting costs,” says Dunne. She suggests value exchange, collaborating with start-ups and enabling agile business processes for starters. And as marketing evolves into hi-tech areas, procurement can become expert in emerging fields such as martech (marketing technology) and data protection.

At IPG, Clark and her team have transformed procurement to become “enablers and facilitators”, and are now moving beyond that to generating revenue and new business. IPG is made up of several agencies, so procurement is facilitating cross-group work, keeping revenue streams internal. It has also introduced a barter system, where agencies will give clients media credits in return for goods.

“We’ve done it with Staples office supply and [media agency] Orion,” Clark explains. “Staples has taken off operational costs in return for ad spend. It’s a win/win for everyone: procurement gets a good deal and Orion gets a new client globally. It’s about changing the procurement process to become more innovative. Procurement is becoming a revenue driver. If you can be seen as someone who can bring them new business, then you aren’t seen as ‘the dreaded procurement’. There’s so much more we can offer.”  

A focus on value beyond savings points to the possibility for procurement to add its own bit of magic to the marketing process. “The two functions have more in common than you might think,” Stephen says. “Marketing is a mix of left brain and right brain. You need the creativity and emotion and the process and data-driven bits. Blending the two is the hallmark of great marketing.”

What can procurement learn from marketing?

How to sell  yourself
How are you packaging your team’s story and selling procurement’s benefits? Take tips from marketing on the importance of communicating a clear message around your mission.

Don’t be shy
Share your successes internally and externally to build credibility. Tell compelling stories about what you have achieved.

Value, not cost
Rather than boasting about cost savings, talk about metrics like ‘right-first-time work’ and how a process change reduced the number of amends needed.

Think big picture
A focus on price, while important, could lead to agencies limiting their creativity. Consider the overall outcome for the brand, like increased awareness and position against competitors, and be wary of driving out too much cost.

Relationships matter
People do business with people. Relationships are very important, so remember to be human.

What can marketing learn from procurement?

How to negotiate
Marketers may lack negotiation skills. Rather than rely on the good cop/bad cop routine, procurement should up-skill marketing colleagues in negotiation.
Measuring success
How is marketing measuring its performance, and linking it to overall business objectives? Marketers can learn from procurement on justifying how it is allocating resources and spending money in the right places.

Embed process from the start
A good brief is clear and well planned to reduce risk of wasted work. AAR research found 73% of agencies say an unclear brief is a barrier to getting work right first time.

Commercial awareness
Learning from procurement not only helps marketers deliver on budget, but also protects against commercial risk such as breaching advertising or media regulations or data protection rules.

Transparency of spend can be a challenge when dealing with agencies. Marketing should be pushing for this as well as procurement. Marketing is one of the highest areas of spend, so you have a right to know what you’re getting from it.

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