10 July 2014 | Will Green
Relationships between purchasers, marketers and agencies are improving, but challenges and tensions remain, reports Will Green.
It would appear there are two separate worlds of marketing procurement. On the one hand there are procurement professionals who have “absolutely got it right”, but on the other, there are those still “running around in the dark”.
For those who have it right, what is the secret of their success? And for those at the other end of the spectrum, why has it gone so wrong? These were the questions raised at the ProcureCon Marketing conference last month, where the challenges appeared to revolve around three factors: the relationship between marketing and procurement, that between procurement and agencies, and the challenge of measuring creative output.
At AB World Foods Sean Rodgers, UK-based category manager for non-production spend, says at business unit level the relationship between marketing and procurement is in the “early stages”.
“Roles and responsibilities are still being defined and engagement from marketing depends on the individual and task that procurement is being asked to support,” he says.
“I wouldn’t use the word adversarial to describe my experience so far. However, I know in the past it has been confrontational. With any relationship when one party has been used to doing things the way they have always done them and then asked to change, it’s going to take time and there will be ups and downs. In some areas of spend the relationship is more collaborative now.”
Rodgers says the role procurement plays in marketing has been around “resolving disputes, negotiating terms and looking at areas to leverage spend”, though this is being refined. “The measurement of that success is currently identified by amount saved. However, added value aspects such as improved terms, greater ROI and improved efficiencies are starting to be communicated.”
For Sandra Howlett, procurement manager for marketing at the RNLI, the experience has been very different – her role was actually requested by the marketing department.
“My post was a new adventure really, and requested by the marketing team to improve their value for money with agencies,” she says. “It has been going really well. I have been literally inundated with work, an indication I feel of the success of introducing a procurement manager for marketing. We have certainly moved on from the traditional adversarial relationship. We learn from each other and listen to each other’s perspectives. An important advantage has been that I sit with the marketing team instead of with procurement. This really helps to embed me within their team.”
Howlett is in the process of setting up quarterly reviews with key agency suppliers to monitor performance and relationships.
“The relationship element is pivotal, and this forms a main aspect of my review agenda,” she says.
Concerning this relationship, Tina Fegent, marketing procurement consultant, thinks procurement and agencies have “invested the time to learn about each other” and in fact marketing has in some respects been left behind. “It is the agencies and procurement that are now working better together. They have both taken the time to understand each other’s agendas,” she says.
“I think that marketing still needs to be brought on the same journey. Too often they can hide behind their procurement colleagues, get them to manage the paper element such as purchase orders, payments and contracts, and be unrealistic in their timelines and expectations.”
Scott Knox, managing director at the Marketing Agencies Association, says there are procurement departments “who absolutely have it right” in their relationship with marketing, but they are in the minority. “On occasions these are individuals who were last week negotiating the price of eggs in commodity-land and now it’s dumped on their desks, without additional training or support, to sort out the creative roster for advertising,” he says. “They are running around in the dark not knowing what to do so they bring one methodology from one place to the next. Most procurement professionals are not supported well enough to properly purchase creative services.”
Knox goes on: “Sometimes getting to the best ideas can take 10 minutes or 10 weeks. Either way the important thing is to get the great creative strategy for a brand, and they [procurement professionals] don’t get that, through no fault of their own. Where things are joining up it’s becoming amazingly supportive of the brand. Where it’s still completely disjointed it’s a mess. Unfortunately I would say the majority are still in ‘mess-land’. There are some amazing procurement people out there doing a superb job but unfortunately they are still in the minority.”
Rodgers says his most significant challenge is “gaining the trust and confidence of marketing colleagues to participate and ultimately own the commercial element of the relationship”.
He advises: “Do not rush to get involved in creative and media agency agreements as these are the most sensitive; use your judgement to find the less emotional areas at the beginning of the relationship. Try and find an informal mentor in marketing to discuss its ways of working, its terminology and be honest about what you don’t know.”
Howlett adds: “The challenges are always the fact that in marketing procurement you have to invest in ideas and creativity and still gain value for money. The key message is to build the relationships with agencies, and build remuneration models that encourage and reward success.”
Samantha Nolan, chief client officer at RAPP, says the best way to build a partnership with an agency is to give them a vested interest in it by “aligning reward to market share”. “Understanding the behaviour you want from the relationship and aligning objectives with that is critical,” she says.
Fegent says marketing needs to do more. “They are very busy people but they need to invest the time to develop the strategies – category management and SRM – with their procurement colleagues on their short, medium and long-term objectives per category of spend, and then work as a highly productive triumvirate to make sure that the right agencies are delivering the right products/service at the right commercial terms for all.”
Time is the key factor for Knox too. “What we need is a bit more commercial bravery to say ‘no, we need to think holistically about where our brand is going’. Get a group of agencies around the table with marketing and procurement and say:
‘What is the methodology we’re going to use to evaluate our comms spend?’ The problem is everyone is under such pressure to achieve results instantly that we’re not getting to a space where we can let that happen.”