Generating value
Firstly, what is ‘value?’ That needs to be established and not assumed, by marketing procurement.
Your procurement leadership team will set you savings targets, cost avoidance, net working capital improvements, spend under management, contract coverage and so-on, but there is often going to be a kind of friction between those needs and what your marketing stakeholders want, which will be around growth in any number of tangible consumer and marketing metrics, not only savings
Value is in the eye of the beholder.
Value to one brand, or even a particular budget holder within one brand marketing team, may be wildly different depending on many factors, so your job – in order to get a seat at the table, and keep it as a trusted advisor – is to make sure you know how that budget holder earns their annual bonus… what I mean is, what are their key deliverables?
- A head of digital marketing at a brand I worked at said to me once, ‘Stu here’s how it’s going to go, never come to talk to me about savings… my job this year is to get more people to sign up to our .com and our apps, to grow active users, and then to buy from us on the apps.
- Those 3 metrics represented value to her, and that led to a close relationship and lots of great work because it was one thing: clear. It also led to a refreshed way that we measured and reported our impact to procurement, more aligned to growth than only savings.
I share this also to give some hope to agencies who may experience that most or all their prospects and brands will be price focused at this time. If you can move the conversation to value, if you can explore and uncover what value is, you can begin to expand the conversation to deliverables and effectiveness, ROI, and not only price.
The more marketing procurement teams and agencies who can discuss value in terms of growth and results, not low price, the better for the whole ecosystem of internal and external stakeholders
How can marketing procurement teams balance the pressure of inflationary costs and the recession?
Firstly, it’s not a downturn for all brands, and for the smart, it’s an opportunity.
In the financial crisis of 2008 when champagne brands were hit hard, some smart prosecco brands invested well in their marketing, took big strides in consumer consideration and when the downturn started to thaw, they were front of mind with consumers, and took share from their more expensive and premium competitors in France.
Not all brands are facing a recession. Understand the specifics of your brand.
Campaign magazine article on Feb 9th said Unilever were upping ad spend by 500m. Some brands know that investing through a downturn means faster recovery at the end. Luxury brands are also more resilient, as the rich don’t stop buying! Marketing procurement at Ferrari probably have different priorities to their peers at Mars
I’d say step back from that specific piece around inflation and even the recession, and ask what the opportunity is to engage better with more stakeholders.
Probably marketing are not mandated to work with you, so you’ll often be looking for an in to drive engagement. If inflation (or anything else) has had an impact on budgets or targets, you might mention that when asking to get time with a new or cold marketing leader.
‘We can help you navigate this. Can I get 10 mins with you and your next team meeting to introduce our team or refresh on what we do, some wins we’ve had with others in the wider marketing team, how to engage us, what types of value we bring.. and maybe dispel a few myths as well.’
Budget holders whose ROI on marketing investments is easier to measure, may well be going up because the CMO is able to show the impact more easily than some others.
What your stakeholder whose budget has decreased may actually be struggling with, is measurement of effectiveness… this means your job is to find agencies who CAN measure effectiveness, who are willing to collaborate with you on performance based fees and not just rate cards.
Your job as intermediary and trusted facilitator between agency, marketing, finance and legal – therefore – might be to help all the parties understand and apply some innovation to how remuneration models are implemented, how and when savings or other types of value are calculated, bring agility to contractual arrangements to allow all parties to flex capacity needed while only paying for what’s needed etc
Very good marketing procurement leaders, and their teams, therefore, double down on making sure stakeholders know who they are, what types of value can be brought, how to best engage procurement, etc… this has always been needed, it’s maybe just needed more now than. The downturn is as good a reason as any to reach back out to new marketeers and showcase your team.
Asking the budget holder what their needs are has always been one of the most important things marketing procurement can do. If they think all you can do is negotiate prices down, or drop statements of work into contracts, that’s on you to change that opinion.
80% of marketing procurement is earning the right to procure some stuff!
How to ensure that marketing stakeholders are getting the same or greater value from budgets
I’m not an advocate for brands simply passing on the hardship to their agencies:
‘we’ve faced huge inflation pressures’ or ‘budget have been cut so we have to cut your retainer’
But while brands have to get smarter, it’s fair enough to ask agencies to get smarter too.
Try to help marketing stakeholders find + on onboard agencies who are focused on impact, on effectiveness, who can use different remuneration models easily, including performance based.
Be prepared to do more:
If you have a very big RFP, do more research on agencies who could be the right fit. Don’t just cast the net wide to 15 agencies and then conduct a reverse auction on an online platform. We’re not buying pens and toilet paper here! Test out new innovations on pitching: ask your stakeholders what’s work. That might sometimes be based on what’s not gone great in the past
Both brand and agency have to spend a lot of effort establishing fit: values, mindset, risk appetite, willingness to test and learn, beyond just ‘please share two relevant case studies.’ Perhaps your RFP process needs to be more hand-on, open and flexible, rather than structured and prescriptive. Here’s where you might find that creative idea or the agency planner who is a rising star. You won’t find that behind a computer screen.
Next, always be listening to the agency market.
Read Campaign Magazine, the Drum, Marketing Week.
Find out what’s going on, see which agencies are winning awards: the Effies, Cannes… don’t ignore thoughtful targeted outreach from agencies when it’s timely and relevant, and don’t be afraid to research agencies for your stakeholders and offer info and intros if you think there’s a good fit
Your job is to bring the best of the outside, inside.
If you want to be seen as a trusted advisor you have to understand their needs, and be proactive. Gather small wins to get a seat at the table, and over time show bigger value as the size of the deals you are involved in grows. A timely introduction to highly relevant new agency could be a good way to do that
There’s an important, broader point about procurement functions being easy to work with, frictionless.
A Poll by procurement tech platform Globality, and ‘the Art of Procurement’ in 2022 showed over 40% of respondents saw procurement as a necessary evil, and only 35% as a valued partner….
But almost 80% said they were quite likely or highly likely to use procurement and procurement processes if the buying process was more intuitive and consumer-like
What this says to me is that procurement need to invest in tools, capability and talent, who can make the buying process easier + slicker. I’ve seen over time that this counts even more for marketing than for other types of procurement.
Whatever the prevailing economic and budget headwinds may be, marketing procurement’s role doesn’t change – for me – it just throws into sharper focus that you need to make your stakeholders feel like you add value, in how you work as well what you deliver. The stakes are higher in a downturn, and your role has never been more important.
Take that as an opportunity to open doors and get a seat at the table. Something that I’ve seen work really well: Ask to present at stakeholders weekly or monthly team meetings: 5 mins of this is who we are and this is what we can do – bring quick case studies from happy stakeholders – show you’re easy to work with, customer focused, and drive many different types of value… not just rate card negotiators, or contract executors. Take control of how you are perceived. Position your marketing procurement team as an ‘engine for value’ or ‘growth’, or ‘an internal agency’…. No one will do it for you
For brands who want to join the Marketing Procurement Club, and to see the full video, click here https://lnkd.in/eKC2hN2r
