16 December 2010 | Angeline Albert
Buyers of marketing services shift their focus from reducing cost to building relationships as their approach to the category matures, a study has found.
Research published this week by the World Federation of Advertisers (WFA) has found that experienced marketing buyers concentrate on building third-party relationships and educating the buying team about the category.
Findings in Maximising Marketing Efficiency run contrary to advertising agencies’ criticism that procurement teams are solely focusing on lower fees and reduced media costs.
Consultancy firm Spire, which questioned 85 senior global marketing and procurement specialists – representing firms responsible for more than US$50 billion (£31.6 billion) of marketing spend – found these buyers are seeking alternative ways of adding value for the client and the agency.
Responses also revealed that sourcing specialists are keen to increase the impact of marketing communications as well as keeping costs competitive.
The research identified five stages procurement teams go through when improving marketing buying:
1) The first stage is that the ability to manage money well by keeping costs down is at least twice as important as any other factor.
2) By the second stage, managing money well and building third-party relationships are equally important.
3) Building third-party relationships and leading SRM programmes accounts for nearly half of sourcing time at the third stage.
4) By phase four, managing processes becomes a focus as procurement seeks to make account management easier.
5) After reaching maturity, managing money well, building relationships, optimising process and driving improvements are all equally important.
The report said progress is driven by two factors: the capability of the procurement team, and the readiness of the organisation to “move beyond a pure cost focus”.
Previous WFA research has shown that some firms take an average of eight years to move from the early stages of procurement involvement in marketing to a permanent global and local strategic sourcing function covering most marketing spend.
“Enabling marketing procurement to fully engage with the marketing spend creates the right conditions for breeding sourcing expertise that boosts marketing efficiency,” said Steve Lightfoot, communications procurement manager at the WFA.
The WFA‘s members include Coca-Cola and Nestle, and the organisation represents 90 per cent of global marketing communications – almost US$700 billion (£444 billion) annually.