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Think BR: Procurement is good for you

It's time to stop being negative about advertising procurement. Research proves that it can help agencies become more efficient, writes Steve Lightfoot, communication procurement manager at the World Federation of Advertisers.

Steve Lightfoot, communication procurement manager at the World Federation of Advertisers

Steve Lightfoot, communication procurement manager at the World Federation of Advertisers

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Imagine how Simon Cowell feels. Everyday the papers are full of negative comments about his conduct, his controlling personality or his trousers.

Marketing procurement doesn’t face quite the same barrage of negativity but it’s rare that a story takes a positive note. Agency comments in the trade press are relentlessly negative about the role of sourcing.

There is still a misperception in some industry circles that procurement is just about cost cutting, reflecting a lack of understanding that strategic marketing sourcing specialists are simply trying to help marketing use budgets to best effect.

In fact it’s gotten so bad that the Association of National Advertisers in the US has reformed a task force to improve the image of the profession. Other national associations including ISBA in the UK also work tirelessly to promote the positive contribution of procurement.

However, new research conducted with members of the World Federation of Advertisers who spend more than $50bn on marketing services each year highlights just how out of date this image of marketing procurement is.

Working in conjunction with marketing effectiveness consultancy Spire, we’ve spoken to 85 global, regional and local marketing procurement specialists.

Their highest priority is not cutting costs but building third-party relationships; more respondents said this was a priority than any other factor.

The world’s biggest brands get it: they understand that efficiency is not just about cutting costs. They know that building relationships with agency suppliers improves overall brand performance.

Although managing money well is an important part of the role, and is often an initial priority, it becomes less and less of a focus as procurement becomes more sophisticated.

We identified five stages in the evolution of the procurement function, demonstrating how their focus extends to areas that benefit agencies as much as clients:

Traditional procurement levers: An early stage of development whereby the team’s ability to manage money well by keeping costs down through methods such as supplier rationalisation is at least twice as important as any other factor.

Balanced traditional: Managing money well and building third-party relationships are both equally important and account for 80% of department focus.

Success through external partners: Building third-party relationships and leading supplier relationship management programs account for nearly half of sourcing time.

Seamless integration: The importance of managing processes comes into play as procurement seeks to streamline and make account management easier, partly through continuous learning and improvement loops.

Balanced emerging: The most evolved stage, with the four principle themes of managing money well, building relationships, optimising process and driving improvements ranked as equally important.

The speed at which companies move up this path is driven by two factors: the capability of the procurement team and the readiness of the organisation to move beyond a pure cost focus.

Progress in both areas depends on a variety of factors, including: company and business unit structure, marketing acceptance of procurement function and senior management advocacy of procurement.

Previous WFA research has shown that some companies have taken between six to eight years to take nascent procurement involvement in marketing through to a permanent global and local strategic sourcing function covering the majority of marketing spend.

There’s no doubt that the tough economic climate has put lots of pressure on budgets. Marketers have had do more with less, and be savvy in managing the costs associated with their campaigns.

As a result the smartest brand stewards have worked closely with their procurement colleagues to help them maximise the resources at their disposal and drive greater effectiveness.

That includes using tools to assess price and volume relationships, enabling informed decisions based on firm analysis that can potentially result in budget redeployment rather than cuts.

It also includes measures that benefit agencies and other suppliers by streamlining processes, running supplier relationship management programmes and more.

In short, they can work alongside marketing and agencies and help both sides do their jobs more effectively, freeing time to develop even better campaigns.

So perhaps next time you want to vent your frustration at the tough conditions of an oversupplied agency market, you should ask yourself three simple questions:

  • Would I benefit from help in building relationships with my clients?
  • Would I differentiate my brand if I could demonstrate that I understood how procurement works?
  • Could apply more rigour to my internal business processes?

The chances are that working closely with procurement specialists could help with all three.

Steve Lightfoot, communication procurement manager at the World Federation of Advertisers

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