Marketing procurement: optimizing the ecosystem

Marketing procurement: optimizing the ecosystem

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Wednesday, December 4, 2019 | Philip Guiliano

The following statement  no longer represents a theoretical destination – it’s time has arrived.

The Marketing, Procurement, and Finance functions are wholly reinventing how they work with each other. It’s changing where the “power” and influence on value lies and what they expect of the partners that provide services to them. And no surprise –most agencies don’t love the change.

It is undoubtedly the right and prudent evolution for businesses. But like every shift, it has its growing pains. The players in the ecosystem are continuing to learn and adapt. As they deliver successes, they are using them to drive sustainable results . And over time, these results will  positively impact each player in the eco-system

As Day One chair of the ProcureCon Marketing Conference for the second year, I had the privilege of facilitating dialogue with leaders who are pushing marketing procurement models forward and are willing to share their learnings. Here are my top three observations.

1. Finding the right in-house/outsourced mix is still a moving target. Some companies are just starting to build in-house agencies. Others, such as Intel and Starbucks, have dissolved theirs after several years. Some companies now use external agencies for strategy and creative while leaving production to an in-house agency. Others retain responsibility for strategy and creative and outsource all production. It can look a bit chaotic, but some trends are emerging. Factors such as industry and corporate culture play into what’s best done by an agency and what’s better handled in-house at each brand. For example, consumer brands, with their deep tradition of classic brand management, may find it best to retain strategy and outsource creative and production. Healthcare systems, on the other hand, may find more value in outsourcing strategy while leaving production in-house to deal more directly with service lines. Others are finding it cost-effective to split creative and production between in-house and outsourced resources.

A big question lingers around the sustainability of the in-house agency, given the challenges of attracting talent, delivering high-end value, developing market-leading creative ideas over the long term, and operating efficiently. Measuring performance, benchmarking, ownership of data, and protecting the brand and the investment are also top of mind. And these present the next real challenge to moving the relationship between marketing, procurement, and finance forward to deliver business value.

2. Agencies are pushing back on some RFP processes, and some companies are listening. Over the past decade, lack of transparency around costs and fees have cost some agencies the trust of the brands they work for.  It’s not an overstatement to say that business as usual for the industry was upended (especially for media agencies).

But now many agencies feel the pendulum has swung too far. And they have a list of legitimate beefs. Some are even saying they won’t participate in what they perceive as damaging bidding processes and are calling on other agencies to play it the same way. Clients simply shouldn’t demand ownership of ideas produced by agencies during a pitch without providing reasonable renumeration. Less abusive but potentially counterproductive are RFP processes that prohibit open communication between the agency and the Marketing department, require agencies to answer scores of irrelevant questions, and almost aim to prescribe how the agency operates its business—while in the end, the lowest bidder gets the business. Creativity and the best, most relevant solution to the problem are sacrificed. In this model, everyone loses something.

Recognizing that the purchase of strategic and creative services probably shouldn’t follow the same process as buying widgets, some Marketing Procurement and Marketing people are bringing humanity, open communication, and common sense back into to the RFP process. They align everyone on their team around the primary objectives of the work before an RFP is issued. To avoid garbage in, garbage out and be sure proposals come in on target, these revamped purchasing processes permit candid conversations BEFORE the RFP is due. Some have even stopped forcing templated RFP answers from agencies and aren’t issuing RFPs for every project as even a slimmed-down process can be overkill. Some are rewriting norms by viewing the RFP process as a chance to build relationships with the agencies they need today and those they may want to tap in the future.

I even happen to like what some companies are doing with the “pitch in a day” model or variations thereof. When these are  executed properly, they give agencies a real chance to work directly with a client on a theoretical problem (not the real one). The process helps companies see how potential partners think and work—which gets to the heart of the suitability of the partnership. These  types of strategies can really help bring out the best in the partners you aim to work with.

3. The value, visibility and influence of indirect procurement professionals continues to grow. This is where things will continue to get particularly exciting in the years to come. The growth of both the ProcureCon Marketing and ANA Financial Management conferences underscores the expanding role of Marketing Procurement professionals. Procurement professionals who focus on how to effectively influence improvements in the identification, selection, and management of Marketing vendors will find many opportunities for significant career advancement. Take it a step further—inspire Marketing to adopt better tactics and operating standards, continue to partner with Finance, and bring agencies along the journey, too—and a real shift in influence will occur. Practicing procurement responsibilities in this way may lead to many opportunities outside of Procurement in leadership roles traditionally not available to Procurement professionals.

Leading the charge for a healthy ecosystem

The push and pull among the four parties yield interesting innovations—and some mixed results so far. Directionally, Marketing Procurement is gaining more influence over purchasing decisions. There is no “one size fits all” model to fit every industry or company culture. Trying new approaches—which means making some errors along the way— as well as being open, transparent, honest, and partnership-oriented – will eventually produce the optimal balance among Marketing, Marketing Procurement, Finance, and agencies at your company. One thing is for certain: it’s a remarkably interesting and exciting time to grow a career in Marketing Procurement.

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