This post is by Steve Lightfoot, senior manager – global marketing procurement at the World Federation of Advertisers.
The roots of marketing can be traced back to 1836 when the first paid advertising in a newspaper appeared in France. It goes back even further than that if you consider the brochures and flyers that could be created in the 16th century via Gutenberg's metal "movable type" printing machine.
By comparison, marketing procurement is barely a teenager, and some might argue it still has much to learn. The recency of its origins means the role is still very much in flux.
When you look at WFA membership, around 95% of global marketers have a marketing procurement operation. The average time that this operation has been engaging with marketing spend is between six and eight years (based on a 2013 WFA survey). Only a handful go back more than 12 years.
This means that a high proportion of the largest marketers in the world are still defining how this function will look in three to five years and beyond.
These are three areas that represent the biggest challenges for them:
Embedding procurement within marketing?
Much of the role of marketing procurement is about agency governance / lifecycle management. That means the pitching, negotiation, performance assessment and the remuneration of agencies. However, generating savings is only a fraction of the value-add that the most forward-thinking marketing procurement teams can offer.
The fact that marketing sourcing most commonly reports into the CPO/CFO means that naturally the KPIs and metrics by which the function is measured skew towards savings or cost avoidance or other financial and working capital improvement.
At the WFA, we have heard many times that if you want marketing and procurement to work well together then they need to be working towards the same goals, and that means sharing the same KPIs.
The next step is to consider where agency governance sits as a responsibility and who actually does it. Within some members, this is done within marketing, but by a separate marketing operations or agency capabilities team. Often the people doing the job are procurement types, with strong financial management and rigorous processes. However, because they sit within marketing, we sometimes see that marketing procurement is actually less mature in such organisations, not because marketing spend is not under "procurement influence", but rather because their marketing procurement processes (and people) are essentially embedded within marketing.
To explore the topic further, read this book by Gerry Preece and Russel Wohlwerth: "Buying Less for Less: How to avoid the Marketing Procurement dilemma".
Where does the best procurement talent come from?
What type of professional makes the best type of marketing procurement practitioner? This is a question that many WFA members are asking. The answer depends on the maturity of your sourcing organisation. Initially, leadership and strategic alignment with marketing is crucial and so marketing sourcing team leaders need to understand the dynamics of the marketing industry as much as they do procurement processes. The best solution is to bring them in from marketing.
Category managers are similar but they need deeper knowledge of particular supply base. That usually comes from having worked for three to five years in an event agency, a production house or a media buying agency. This experience is arguably more important than procurement process expertise.
Supply chain managers require less marketing specific knowledge. Within the indirect space, there are lots of transferable supply chain governance processes (from managing law firms, HR suppliers, travel, etc.) that can be applied to marketing agencies so long as a light touch is used.
Similarly, with the right type of leadership and education within the marketing space, tactical buyers (or e-sourcing, PO systems experts) can also be brought in from indirect procurement. Their techniques can be well applied within the marketing space, so long as the leadership sets out clear rules for how e-sourcing will be applied for example, and how complex approval/financial systems will be used with resource lean tech start-ups.
The matrix is not the future
Procurement typically divides up marketing spend into categories such as POS, Print, Production and Media and then appoints category managers for each different area. This matrix can be incredibly complicated for multi-market and multi-brand organizations as spend, the number of suppliers and the ability to source the service regionally or locally all vary significantly.
Many marketing sourcing teams have therefore looked to manage some categories centrally (sourcing creative agencies and design globally, for example), while running others from the local markets or regional hubs (such as Print or Media or Events).
The elephant in the room is that marketing does not look at spend in the same way. And neither do consumers (hence the importance of integrated marketing communications). Some marketing sourcing teams have mirrored this view within their structure by reshuffling media into three areas of paid, owned and earned, for example.
Similarly, we have seen the rise of sourcing experts in the central team taking on the title of integrated marketing or integrated media sourcing. With this model there is still room for specialists in ad production working on TVC development costing models, but only when the need arises.
This model also helps sourcing come to terms with rapid evolution in the digital space and creates the space to call upon a mobile app specialist when required rather than rely on the knowledge of a "digital" category manager with an increasingly broad remit. The principle therefore moves from "covering spend" to "servicing business needs".
All these challenges are surmountable with the right help, and that often comes from finding out what your peers are doing. Our SOURCINGFORUM helps marketing procurement teams skill up quickly, and its mission is to help organizations build the marketing procurement team of the future.