Can Marketing Procurement help CMOs sleep better at night?
Reflecting on the article “what keeps CMOs up at night”, published by Joe Mandese for Media Daily News on May 8th (link posted below), we believe that least five of the top ten concerns for CMOs can be addressed by partnering closer with Marketing Procurement.
We have reviewed the above key concerns and identified with a ☑ are the concerns where marketing procurement can (and should) be a strong ally for CMOs in terms of reduce their lack of sleep.
1. ROI: Maximizing Returns on Marketing Investments:
One of the top concerns for CMOs is to ensure that marketing investments yield favorable returns. Marketing procurement play a crucial role in optimizing these investments by conducting comprehensive cost analyses, negotiating favorable contract terms, and identifying areas of potential savings and efficiencies, which is what procurement does on a daily basis.
For media spend in particular, there is ample opportunity to make sure that agency partners estimate and deliver on media savings on an annual basis. This can be done through implementing and tracking strong KPIs around this and tie incentive payment for the agency to deliver solid year on year media savings to the client. This is tracked on a quarterly basis by the procurement team and reported to all stakeholders. In fact, many marketers have contracts in place to include an incentive based on media savings, but often it is never implemented as it is deemed too complicated to track. This is of course not true and should be addressed by marketing and procurement every time a new SOW is negotiated.
Other ways to drive efficiencies is to better estimate savingsachieved by utilizing other methods of purchasing. This is a very slippery slope as many agencies will require the client to give up transparency in order to access these services. However, with a well educated and highly controlled process, marketing procurement is the best team to manage this successfully.
Ad production (film, radio, and digital etc.) is another area where savings and efficiencies can be identified by engaging with a production consultant, such as APR (Advertising Production Resources) and other players before production takes place. Again, marketing procurement work closely with these partners to identify, implement and track benefits thus driving the best possible ROI in all areas of marketing spend.
It is also important to continue to “test the market” on a regular basis, to benchmark the market price for media and other marketing investments. This can happen through a pitch or a more informal review and collaboration with the current agency — all led by marketing procurement and participating stakeholders.
Finally, by introducing corporate governance, clients can have insight into how marketing partners range on both media pricing, transparency, and other commercial areas. These areas often drive inefficient use of marketing dollars and a tight control of these can help free up additional marketing dollars relatively easily for clients.
2. Inflation / Recession
Marketing procurement spend a fair amount of their time researching and learning about market conditions, inflation expectations and other economic data that can impact the marketing spend under their purview. They also frequently research partner organizations (ad agencies, Martech, holding companies etc.) to understand how they stack up against each other and potential newcomers. This research should make its way to the CMO office and marketing team in form of a concise one/two-pager as and when appropriate. It can be produced at a regular cadence (monthly) and be no more than a quick page or two of relevant information. Great sources for marketing procurement to utilize as their “go-to” sources are for example the monthly newsletter from AgencyMania, the advertising industry analyst Brian Wieser of Madison and Wall, as well as marketing news sources such as AdWeek, AdAge, Campaign. In addition to this, MXPIQ.com is a modern and very robust news publisher for the marketing procurement community. In addition to these news outlets, the ANA, 4As and ISBA have a lot of insights to share on most topics. It is also important to read the quarterly reports on listed companies for hidden gems on performance and attend industry conferences such as the ANA Media, AFM, Procurecon Marketing and others to meet like-minded professionals and support companies.
3. Profit/ Share Holder Value
Profit and shareholder value are based on a company’s ability to sustain and grow profit over time. Marketing procurement focus almost exclusively on the efficiency drivers of a company. The function itself is created to get the best possible services at the best possible price. There are many criteria that go into the definition “best” — especially in marketing — and can include price, quality, availability, access, transferability, measurement etc. but we won’t bore you with a review of procurement 101 in this article. Important actions such as value-based supplier selection (where other drivers than only cost and quality are considered as part of a proposal), performance monitoring and ROI analysis are imperative.
Cross-functional collaboration to streamline processes and forging strong and strategic partnerships to continue to increase effectiveness and efficiencies are deemed the center of excellence for marketing procurement. What is key here is that lowest cost is not the sole criteria for selection, but once you find your best service, you should manage the cost effectively to deliver shareholder value.
4. Budget cuts/ Strategic Budget Management:
Budget cuts continue to be a significant concern for CMOs, requiring them to constantly make tough decisions and prioritize their marketing activities. Marketing procurement can assist by providing data-driven insights and analysis of current budgets and work with the CMO to find ways to manage the non-working media budgets more effectively. By identifying areas of inefficiency and exploring alternative execution options, marketing procurement can help CMOs find innovative ways to spend the marketing budget available to deliver on the marketing goals. It is key to have a strong budget management in place, and to track progress against the marketing KPIs. This way it is easier to demonstrate how a budget change will affect the targets committed to in the budget. This should be reviewed at regular intervals to better understand the impact budget changes have on marketing success. Also, if there is a tightening of the marketing budget, a careful review and evaluation of other ways to purchase media may be considered. This needs to be driven by marketing procurement as there are many pitfalls in this space.
6. Brand Purpose/ ESG
Marketing procurement is currently playing a significant role in supporting brand purpose and ESG (Environmental, Social, and Governance) initiatives by incorporating them into supplier selection processes. Marketing procurement evaluate existing as well as new marketing partners based on their commitment to sustainability, ethical practices, and social responsibility. By partnering with suppliers that align with the brand’s purpose and ESG goals, marketing procurement ensures that the brand’s values are upheld throughout the supply chain.
In terms of evaluation of new marketing partners, suppliers or vendors, procurement should be the main lieutenant in charge of evaluating potential partnerships and sponsorships based on their alignment with the brand’s purpose and ESG objectives. This involves conducting due diligence on partners’ sustainability practices, social impact initiatives, and overall reputation to ensure a positive brand association. Marketing procurement will partner with ESG experts and other stakeholders.
Once a relationship is created, marketing procurement collaborate with marketing and the partner teams to establish and validate key performance indicators (KPIs) and metrics that measure the brand’s progress in fulfilling ESG goals. By tracking and reporting on these metrics, marketing procurement helps showcase the brand’s commitment to sustainability and social responsibility to stakeholders.
Since this is a relatively new area with fast and dynamic developments, marketing procurement should seek and validate continuous improvement. By staying informed about industry trends, emerging best practices, and evolving stakeholder expectations, marketing procurement will guide the brand in adapting its strategies and initiatives to remain relevant and impactful.
ESG efforts also need to have a voice internally to gain traction and marketing procurement can, alongside its agency partners, lead the implementation of ethical marketing practices and established guidelines and codes of conduct to ensure that ethical practices are followed.
In summary, we believe marketing procurement is a strong and important partner to marketing and its agency partnerships. By working together, dividing and conquering and always return to the base for planning, reporting and partnership, both marketing and procurement should be able to achieve better sleep.
References: https://www.mediapost.com/publications/article/385142/whats-keeping-cmos-up-at-night-its-the-economy.html
