My work as Marketing Procurement Category Director is much more to sell than buyKirjoitettu: 3.8.2017
I have been attending ProcureCon Marketing EU event probably four times. In this summer, the event was bigger than ever with almost 300 participants. Even there were no real big “new news”, number of the topics crossed consistently presentations, discussions and round tables and confirmed both major development at the industry as well as, unfortunately, some major concerns.
What was very interesting indeed, the lack of “success cases”. I trust that the reason for that is, that success in marketing procurement has become a commodity, there is no need to flag it as in the past.
When looking synthesis of everything during those three hectic days, a few topics are raising up:
1. Still, marketing doesn’t often trust the marketing procurement and its skills.
This is a boring cliché to all marketing procurement veterans, but it seems to be still a real problem. And the problem simply is, that after maybe 12-13-years’ investments and development, marketing procurement, in many cases, just don't have the necessary skills, so marketing is absolutely right, not to trust them.
Both procurement and marketing look often marketing procurement as a unit or function, which doesn’t exist. The reality is of course, that different “marketing procurements” are on completely different maturity and competence level. And based on their competence level they are or are not able to deliver what marketing needs or requests.
In fact, should the real question to procurement be that on what development level you want your marketing category to be and how to get there?
Different presentations floated the ideas of Marketing Procurement's v. 1.0, 2.0 or 3.0 with recommendations, that 1.0 is simply dysfunctional to procurement, marketing and corporations and should be closed.
But then the other view to the problem is marketing and its often very narrow view of what advanced marketing procurement is able to bring to the table. Good example was, when a seasoned marketeer at the event claimed, that the ultimate service marketing procurement should be able to do, is perfect pitch….? So, exactly what marketing has done during the past 100-years, a few extra pairs of hands saving time to do boring excels, nothing more? I think, that this is exactly nobody's real benefit.
Here is the Marketing Procurement Maturity model that we are using at Beaufort Marketing Procurement when developing client competencies.
2. Frustration, when Marketing Procurement has been locked to the “standard indirect procurement box” – savings vs. added value
I remember my own experience, when a key stakeholder from Sales Operations requested our support to optimize Field Force in 27 European markets and get incremental sales based on the optimization. And when my superior and VP of indirect procurement denied our support on the basis, that no savings were available, as all “savings” would be reallocated to improve sales operations!
When informing Sales Operations of the procurement’s decision, their facial expressions were revealing. Obviously, expansion to business management moved the project back to the track, but it was not the greatest hour in my procurement career…
Is Marketing Category different than other indirects and if it is, how? There is at least one fundamental issue in marketing. Marketing spend, as procurement calls it, should in fact be investment with clear Return of Marketing Investment (ROMI). Taking this account of, many “procurement walls and truths” should be moved, because developed Marketing Procurement needs to focus not only savings and delivery, but value and return of investments. And if not, most opportunities to add value to company, have been lost in advance.
What has been almost tangible development in all ProcureCon marketing events, is the growing frustration that marketing procurement has been tied to the standard procurement robe and prevent moving to the value adding services.
It was probably more than understandable, that ISBA Communication Procurement Forum presented plan to develop its own maturity model, focusing on added value benefits or as they call it “VBS - Value Beyond Savings”.
3. Marketing Procurement as a career
Offering added value services sounds simple, but major bottleneck is, that then you need to have a marketing procurement specialist with deep knowledge about marketing. From traditional indirect procurement point of view, expertise like that seems impossible to reach, as in fact, most of the people in marketing procurement has been only visitors. Their career has been procurement and they have been assigned only a few years to marketing category. And when they have been able to learn something, they have moved to the next category to disappoint not only marketing procurement, but marketing itself. And new people without any marketing knowledge has been moved to marketing procurement starting the annoying cycle again.
For big global marketeers, who have marketing procurement team of 10 or more, this has, more or less, been manageable, but for a team of only a few people, it has destined the category the continuing immaturity.
Available and more and more fashionable solution has been to move marketeers and inject marketing knowledge through them to marketing procurement positions. It has also been a common view at least from marketing point of view, that it is easier to teach procurement to marketeers than marketing to procurement professionals. But even now there is still a question about careers in marketing procurement. If also marketeers, are just visiting in the category before moving back, they are not able to develop and transform the category to the level 2.0 or 3.0. Marketing procurement is not only marketing, but an own special area of deep understanding of marketing agencies internal drivers and dynamics. And been “only” on marketing side of fence, does not guarantee that.
4. Trust lost between client and agencies – could it be found again?
Again, clients are building their own in-house agencies or resources, agencies are finger pointing that procurement has carved their business to the bones, they are not profitable enough, not able to pay enough or competitive salaries to their staff and by default transformed the magic to commodity.
As often, reality is a little bit more complicated. First, with exponential number of media channels and commercial messages, by default bulk of the advertising or commercial messaging should become commoditized anyway, just as many of the “premium” brands and products, we have been appreciating, have been commoditized.
Second, while I strongly believe that creativity could still add huge value to businesses, lots of what agencies are selling are in fact commodities, which should and could be put under efficiency measurement. When creativity should be measured by results, commodity services should not.
Third, as salaries often are only half of the agency’s total costs, it is reason to ask if the balance is right. What marketeers are at the end of the buying, are people and their skills who should deliver added value to them, not office rents. So, there is still plenty of space to introduce more efficiencies.
Quite eye opening too was the view to one creative agency revenue, costs and profitability between its clients. Analysis shows that the same output in different accounts require anything from 2,1 to 17,8 FTE's, average been 4,9. Working hard to improve both briefing and approval processes as well as agency internal processes are more than worthwhile.
5. Media, media and media, digital or not, transparency – or lack of it.
Media planning and buying and the lack of its transparency have been real hot topics for some years already, so there is no need to repeat all the ongoing discussion. However, a few details as food for thoughts:
- 2005-2014 top six global media agencies’ media volume growth was 24%, but their revenue was up 60%. So, it is relevant to have visibility to what is the source of the extra revenue
- Only 25% of digital media investments are working media as the media supply chain remains non-transparent
- Long term worldwide and analysis indicate that different media channels’ average indexed ROI differs heavily:
- TV – 1,00
Radio – 0,38
Press – 0,32
OOH – 0,29
Digital – 0,24
So, why digital, the media of the future and measurable favorite child, has failed? Simply, because there is only a few media spend which really meet the target group after all the non-human traffic and artificial supply chain costs and even then, only 26% of the digital ads viewed have caught more than one second of viewers’ time. But because everyone has been so excited about digital media, “the traditional one million flies cannot be wrong” (or bandwagon) marketing approach has been working well to sellers, but against marketeers.
So, some work for the transparency of the media supply chain and marketeers recognition still need to be done. And question that every marketing and procurement professional should ask from himself is: Is your real work to recommend to move more media spend to digital?
6. Creative production transparency
But should this be an issue, which has been fixed when production has been unbundled? Unfortunately not. Clever agencies and their business management are always able to find ways to pass the checks and balances created. Holding companies and agencies are building their own, not so independent and transparent production agencies, units and facilities. Tenders they are managing are not objective as their owned or non-transparent joint ventures are joining. It seems that unbundling has not been the final fix, but only the first step to transparency.
And finally, something lighter and almost new. Music was the unexpected star of the sub-categories: there were three different presentations on how to source music from strategy, efficiency and cost perspective. Brilliant.