For a lot of agency bosses, procurement has been a growing pain point for years. The World Federation of Advertisers feels their pain, and has just released a plan for how procurement can be transformed to adopt a values-based model that strives to deliver top-line performance rather than simply cut costs.
Dubbed “Project Spring,” the initiative was launched by WFA in 2018 after a study of its members found that 87% could not imagine a world without marketing procurement, but 92% agreed the way marketing procurement is perceived by their organization could be improved.
Since then WFA’s Global Sourcing Board, comprised of 12 global marketing, sourcing and procurement executives from major brands like Adidas, IKEA, GSK, Mondolez, L’Oreal and Unilever, worked to figure out how procurement teams can transform into a more strategic role rather than one focused primarily on driving savings and negotiating contracts.
The report, “Project Spring: Revolutionising the perception and contribution of marketing procurement,” provides practical steps in four key areas: Process, people, performance and partners (read the brief explanations below and download the full report here).
“Procurement has often been blamed for driving costs down and this when dealing with agencies has been a one-way traffic system where the pain is taken by agencies, but the gain entirely goes to the client,” said David Wheldon, recently retired CMO of RBS. “The role of marketing procurement is to ensure that value is delivered for the client company and for the agency partner.”
“The role of marketing procurement, as all other supportive functions, is to enable business outcomes—which to me often means how can they help me find the best agency talent to ultimately drive growth, added Beatrice Lindvall, global media and digital director, JDE. “I believe that a successful marketing procurement team actively works on more sophisticated means to track and measure agency performance and delivery above and beyond a cost discussion.”
While the process began pre-COVID, the report authors note that their recommendations to focus on value rather than costs will be even more important now, with many marketing budgets squeezed during the economic downturn triggered by the pandemic.
The ambitious goals of Project Spring are clearly spelled out in the opening lines of the 41-page report: “It’s time for a revolution in marketing procurement. A transformation from savings to value.”
Procurement and sourcing members of the WFA want to “rid the profession of bad practice and reduce the number of opportunities for negative articles about the discipline.”
The report is meant to outline different initiatives that will not only help change perceptions of procurement, but improve the contributions it makes to the marketing team. “It is designed to inspire and end the ‘race to the bottom’ that some marketing procurement practitioners are contributing towards; blindly cutting costs and reducing fees.”
It is not a map to perfect practice, the report stresses, “but the start of a journey.”
The four pillars of Project Spring:
Process: Marketing procurement needs full visibility on total marketing spend, because increasing visibility enables the team to view the company’s marketing investments as a whole and enlarge the value marketing procurement can bring.
People: Half of marketing procurement teams report into supply chain and 34% report into finance. Data shows that marketing procurement teams that report into finance are less likely to be seen as adding broad value to the business. However, as organizations adopt a more flexible matrix management approach, the importance of reporting lines is becoming blurred and the creation of cross-functional teams is recommended to overcome these types of challenges.
Performance: There remains a significant reliance on cost reduction and cost avoidance as core metrics. Procurement must ensure that their metrics look beyond price and capture wider, often less tangible benefits brought to the business—such as a contribution to top line growth sales, the development of successful agency relationships, or the reduction of business risks.
Partners: Changing the way marketing procurement perceives agencies is essential to evolving the perception. Agencies are not simple vendors; they are an extension of the internal marketing team and can have an important impact on the company’s business KPIs. Marketing procurement should play an active role in ensuring the success of the work performed by agencies working on their account.