The Billie Jean King adidas campaign, which encourages girls not to give up sport, won gold at the Cannes Lions awards ©Adidas
The Billie Jean King adidas campaign, which encourages girls not to give up sport, won gold at the Cannes Lions awards ©Adidas

How procurement and marketing work together

posted by Jennifer Small
6 September 2019

Procurement can help marketing beyond cost savings, as the Billie Jean King adidas ad campaign proves

Ad bible Campaign summarised the big stories of the start of 2019 with the headline: “Procurement flexes its muscles in the UK.” It was referring to Audi’s decision to review its advertising agency accounts, despite a 37-year relationship with Bartle Bogle Hegarty that consistently produced award-winning work. The review is being led by procurement, and while details remain under wraps, insiders suspect its marketing team would not have been happy to be overruled.

While it may be deemed an “anomaly” by industry commentators such as marketing procurement consultant Tina Fegent, it does offer proof that marketing procurement is aiming to get into bed with marketing, for better or worse.

In both consumer-facing and B2B companies, marketing procurement professionals need to buy an array of marketing services, from PR and communications, through data services, digital marketing and social media, to creatives for TV and radio campaigns. They are very often tasked with buying services from media agencies, which buy media space for ad campaigns.

And spend can be huge: for companies such as Lucozade Ribena Suntory, it is larger than any other category, with the brand giant spending more on marketing than on logistics or warehousing. And yet, according to delegates at global marketing procurement conference ProcureCon Marketing, held in London earlier this year, only 5% felt current perceptions of marketing procurement were “extremely positive”.

So, what is the future for marketing procurement and how can the function improve results for the business – and collaborate harmoniously? This is the goal of the World Federation of Advertisers’ Global Sourcing Board, led by Laura Forcetti and formed of 12 marketing procurement leaders from adidas and Mondelez, among others.

The board aims to help accelerate change, formalise what good marketing procurement looks like, collate standards, and help other procurement leaders progress from cost to value. It will also champion WFA’s Project Spring, designed to reshape marketing procurement from being a “cost-killer” function towards acting as “a true strategic business partner for stakeholders”.

“Pretty much all marketing procurement leaders are conscious that the perception of their discipline is not always positive, and they want this to change,” says Forcetti. “Many of them have already moved far beyond just savings and look to understand value and contribution to growth by focusing on what actually matters to their business.”

This is key, explains Tracy Allery, associate director of global procurement at Mondelez International and co-chair of the WFA Sourcing Board. “We are commercial advisors with expertise in how to structure and manage relationships to achieve stakeholder objectives, so our metrics must evolve, for example, from savings to value and from procurement-only to stakeholder-aligned.”

Value-in, not cost-out

Barry Byrne, global marketing procurement director at adidas and co-chair of the WFA Sourcing Board, says the function has been treated for too long as a cost-cutting machine, reducing fees and challenging agencies. This “race to the bottom” only results in poor quality, bad relationships and ultimately negatively impacts sales, he says. The focus must be on “value-in, not cost-out”.

“I woke up one morning and said I’ve had enough of this cost-cutting sh*t everybody talks about, so I’m going to post on LinkedIn. And within days I had hundreds of people wanting to connect and create a forum,” says Byrne, whose forum already has nearly 400 members (The New Face of Marketing Procurement). “There’s a huge opportunity for the future of marketing procurement – a new desire for people to want to understand: how do I optimise my end-to-end marketing supply chain? How do I optimise my sponsorships to grow my brand?

“Any fool can cut the cost of a creative agency. Anyone can say ‘Cut costs by 10% or we’re not working with you’ – the brand manager can do that,” he says, and if that is all the marketing procurement team provides, it is simply slowing down the process, he adds.

“Marketing procurement needs to flip it, and say to the marketing team, ‘I’m going to work with you on this project, and I think we can release 20% value, and you’re going to have that 20% back to reinvest behind other campaigns that you’re working on,’ and then the whole game changes: it’s a value-add to your campaign.”

At adidas, marketing and procurement are working successfully together, he says, and points to the Billie Jean King campaign ‘Here to Create Change’ as proof that pushing the value-in proposition is creating successes. The campaign, which won gold at Cannes Lions, the creative industry’s annual awards, included an experiential element where the brand transformed all kinds of shoes into the athlete’s signature striped trainers, as well as posters depicting the tennis star, superhero style, wearing tracksuits from the brand.

Just one example of Byrne’s belief that marketing procurement must get “embedded” into marketing strategy, and why marketing and procurement people should be working together on a day-to-day, end-to-end basis.

The same language

So, has the age-old tussle between marketing and procurement had its day? The PepsiCo example is cited by many industry commentators as a landmark event for marketing procurement: in 2015 it was reported that the company had eliminated its marketing procurement department. In fact, this was only part of the story. The company had moved to manage procurement processes from within marketing.

As Sergiusz Szacki, indirect procurement manager Europe, media and marketing, Colgate-Palmolive, says: “I can’t say if this works well for them or not, but I can imagine in the future creating a ‘marketing operations department’ which would be somewhere between marketing and procurement – so the future can be marketing and procurement, together.”

Szacki, who started out as a media planner and buyer before moving to marketing and then marketing procurement, says it helps that he “speaks the same language as marketing” but that “marketing should always take the lead, because a 100% procurement-driven strategy for marketing can be a mistake with negative impact on business results”.

This is a view supported by Louise Deane, sourcing group manager, marketing, Lucozade Ribena Suntory. Deane is a member of the CIPS Specialist Knowledge Group (SKG) on marketing procurement, which aims to help those in the profession who are new to the marketing category to upskill and support them in developing processes and approaches.

“I take a very collaborative approach,” says Deane. “I’m not there to pick the agency; I’m there to make sure we’re getting the best value from the agency that they select. Sometimes that’s difficult for CPOs to get their head round – it’s not always about the bottom line, it’s about making sure the value is the best that it can be within the contracts you have.”

However, Deane does make a point of getting to know the agencies and carries out “supplier relationship management”. It works for both parties. “The agency needs to be profitable to continue to work with us,” she explains, “and we want the agency to be successful and attract the best talent to work on our accounts.”

Fegent, who consults for brands including SSE, Boden and Halfords, and is the chair of the CIPS SKG, says: “Marketing procurement has come a long way, with procurement taking a stronger lead and moving upstream. What other category covers this amount of services?”

What’s needed now is a focus on innovation and adapting the procurement process so that brands can maximise opportunities from, say, the two guys in a back room who’ve just developed a great app, rather than waiting six months for a pitch process, or insisting on two years’ financial information, says Fegent. “Marketing procurement needs to get to know the supplier market and work with that.”

Convergence of functions

One trend in the profession noted by many are individuals’ career moves from marketing into marketing procurement. This is true at enterprise software company Sage, according to global procurement and business partner Jaime Ali. “A lot of marketers are joining procurement teams and they bring with them a wealth of understanding of agencies and agency models, and also that real understanding of the value that sits behind the marketing investment – not just cost,” she says. “Certainly the number of marketers that are now looking at procurement roles is exciting. And it goes both ways; I’ve spent time understanding marketing as a profession in more detail.”

Ali sees a “convergence” of marketing and procurement, with collaboration between the two having “certainly increased” over the past five years. Byrne goes further: his global team of 14 in adidas’ marketing procurement all came from marketing at organisations such as Netflix, Diageo and Nike.

“I don’t have a marketing procurement team, I’ve got a marketing team that does procurement,” says Byrne. “What I want is commercially minded marketing experts, and I think that’s a big step forward. My team can tell you: ‘Hey, I know you’re doing it this way, but did you know that Mondelez is doing it that way?’ They can bring the outside in.”

Learning efficient ways of working, eliminating waste and streamlining processes are goals for most businesses, but especially important if you are one of the top five advertising spenders in the UK – and spending public money – as in the case of Tracy Clark, commercial director at Crown Commercial Service, which runs public information campaigns.

“In the past it was about austerity, but we have used evaluation criteria to prove that when we transition to a higher majority emphasis on quality rather than cost, we get better results,” she says, and more responses to ads equals better ROI. “I always have to ask myself: where is it right to invest this pound so that I get the best for the taxpayer?”

Clark cites the recent teacher recruitment campaign, ‘Every Lesson Shapes a Life’, as one successful collaboration between marketing and procurement. But she goes further, explaining that marketing is now so much more of a business activity that it “necessitates a broader approach, across finance, IT, a whole ecosystem, not just an amalgamation of marketing and procurement”. Technology, she says, is a key tool. “We need to be thinking about how technology can improve our operations, not just search engine optimisation, but how to use IT to make our whole business work better.”

Opportunity to upskill on IT-based contracts

As the future is becoming increasingly digital and tech-led, so the line between what was traditionally IT procurement versus marketing procurement has become blurred, according to Ali. She sees this as a huge opportunity for marketing procurement professionals to upskill on IT-based contracts.

“Marketing technology is a dynamic space that is becoming more globalised,” says Ali, “but with that opportunity comes risk. It’s our job to help marketing stakeholders through that journey and work with our procurement colleagues more broadly.”

Allery believes that in today’s leaner business environments, where everyone needs more time, marketing procurement professionals can use technology to help marketers focus more on the creative and strategic aspects of their roles. For more tactical aspects, she suggests an internal online shopping cart where marketers can pick out and buy standardised services, such as market research, or products, such as point of sale.

“It should happen in a natural way. At the moment it’s not like that. They have to know the company code, the plant code, etc, and if they make a mistake then the invoice doesn’t get paid or the purchase order doesn’t get created. We have to get better at streamlining these processes. Technology has the potential to make it easier, but it’s about deciding what to choose. In Mondelez we have a team looking at digital technologies and data science to see what can help us.”

For now, the future of marketing procurement looks healthy, but for a long and happy marriage with marketing, procurement professionals will need to ensure they continue to get up close and personal with the category.

What are we trying to get?

The marketer’s view: Scott Zalaznik, senior VP for digital marketing, adidas

“In digital marketing, we have a lot of specialised training and skills and within the organisation we have hundreds of contracts going on at any given time. The procurement team help us negotiate the best value that we could get from a given partner or contract.

“I’ve had the benefit of working in a number of different companies in a digital capacity and the biggest compliment I would give the procurement organisation at adidas is that they came first to me and my leadership team and said, ‘What’s the business challenge that we’re trying to get after?’ And that conversation was about value, it was about strategic fit, it was about ‘What does success look like?’

“Whereas other companies I’ve been in, it became more about, ‘How can we get to the lowest price?’ Price matters, but value is where you get the long-term return on investment. It’s that type of value creation that I think makes our procurement organisation special.”

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