Demonstrating the value of marketing procurement

By Sarah Scudder, President and Chief Revenue Officer, Real Sourcing Network

In 2020, the World Federation of Advertisers (WFA) published an important report on the current state of marketing procurement. This report is part of an ongoing initiative called Project Spring that is being led by the WFA Global Sourcing Board. The Project Spring initiative’s goal is to “transform the value proposition of marketing procurement”.

The first portion of the WFA report describes the results of a 2018 survey of senior marketing procurement executives that examined how marketing procurement functions are structured, how they operate, and how they are perceived within organisations and by external partners. The balance of the report focusses on what marketing procurement professionals need to do to increase the value that they create for a business and to enhance the perception of their work.

Based on the survey results and several subsequent workshops involving groups of marketing procurement professionals, the WFA identified four categories of challenges that must be addressed to enhance the perception of marketing procurement: process, people, performance and partners.

In a poll conducted at the 2019 ProcureCon Marketing London Conference, more than a third of the audience indicated that these four groups of challenges were equally important to address. The remaining two-thirds of attendees were fairly evenly split on the importance of each category: 22% gave top priority to performance, 16% to process, 14% to people and 13% to partners.

The challenges that the WFA identified are all important and I plan to discuss each of them. In this article, I will address the process challenges and the WFA’s recommendations for navigating them.

The WFA survey identified several operating characteristics of marketing procurement that are associated with a more favourable perception of the function. For example, survey respondents indicated that their business colleagues were more likely to recognise the value that marketing procurement can deliver beyond just cost savings when:
1. The marketing procurement team is involved in the early stages of the sourcing process
2. There is a mandate (in some form) from senior company management to involve procurement in sourcing the products and services required by marketing, and the spend threshold for procurement’s involvement is set at a low level
3. The marketing procurement team has a high level of visibility of marketing spend
4. The marketing procurement team is addressing a substantial percentage of total third-party marketing spend

Early involvement
In discussions with the WFA, marketing procurement professionals were emphatic that they could deliver value to a business at all stages of the sourcing process and that early involvement is key to maximising the value that procurement can create. Therefore, the WFA recommends that marketing procurement professionals should strive to become involved early in the sourcing process and maintain their involvement at all stages.

Senior management mandate
The 2018 survey found that having a mandate from senior company management to involve procurement in sourcing the products and services required by marketing was strongly associated with a more favourable view of the function if the threshold for procurement’s involvement was set at a low spend level. The WFA recommends that marketing procurement professionals should seek to obtain a mandate from senior leadership or expand the mandate if one already exists.

However, the WFA points out that a mandate can be a double-edged sword. If procurement is successful in persuading senior management to create or expand a mandate and then does not deliver increased value, procurement will likely not be given a second chance. Therefore, marketing procurement leaders must be certain that their team has sufficient bandwidth to manage the expanded role.

Spend visibility
To identify opportunities for value creation, marketing procurement professionals must understand where and how marketing dollars are currently being spent. The more comprehensive that understanding, the more likely it is that procurement can identify ways to create business value. Therefore, the WFA says that procurement professionals should work toward obtaining accurate and comprehensive information about total third-party marketing spend.

Addressable spend
Clearly, procurement’s ability to create value for a business is directly related to the proportion of total third-party marketing spend that it is involved in managing. As such, the WFA recommends that procurement professionals seek to increase the level of marketing spend that they are addressing.

The COVID-19 pandemic has created challenging conditions for many business enterprises and it has elevated the importance of maximising the value produced by every dollar of marketing spend.

Our hope is now on effective COVID-19 vaccines. However, even with vaccines, it will still be critical to optimise marketing spend.

These circumstances have presented marketing procurement with a unique, if unwelcomed, opportunity to demonstrate how it can deliver value to a business. The WFA recommendations outline an effective strategy for meeting this challenge.

Real Sourcing Network (RSN)

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