Use creative technology to bridge the gap between marketing and procurement

Improvements will come from alignment, and COVID can be the catalyst for improvement rather than disruption, argues Genero CEO and co-founder Mick Entwisle.

The need for innovation in marketing has arguably never been greater. The proliferation of digital devices and channels has created a new set of challenges, but the ability to use data and technology to tailor, target, measure and evolve at speed provides extensive capabilities. The combination requires transformation both internally and externally across agency and supplier relationships, and the adoption of new ways of working.

In such a fast-moving, complex environment, agile, constructive procurement as a partner for the marketing department is imperative. But many of the marketers we speak with highlight the misalignment between procurement and marketing. The result is negative perceptions within the business and a framework of ‘institutionalised conflict’, where people within the same company with the best of intentions are forced into conflict and workarounds because of outdated and inflexible policies and processes.

A 2018 ​World Federation of Advertisers (WFA) survey​ found 92% of senior marketing procurement VPs and directors felt the way marketing procurement is perceived in their organisation could be improved. And at ProcureCon Marketing London 2019 only 5% of the audience said that current perceptions of marketing procurement were “extremely ​positive”.

Much of the misalignment stems from procurement’s laser focus on cost reduction and the strategies that have been implemented to achieve it. Rather than enabling marketing to make informed choices about creative services, the focus on cost reduction is often at the expense of marketing effectiveness. And while cost control is crucial at a time when budgets are shrinking and marketers are being asked to do more with less, the strategies employed can often have unintended consequences that inhibit marketing from achieving their broader objectives.

One of the key strategies employed by procurement to drive cost savings has been a consolidation of marketing suppliers. But that consolidation can compromise marketing’s ability to meet its own objectives, an issue highlighted by one CMO we spoke to: “Consolidation is a problem because you get a homogenised output which isn’t bespoke to channel. You need to have people who understand the channels that you’re in to get the greater output. And you need creativity to set you apart. You must have differentiation or the capability to create that differentiation.”

In November 2020, a ​study by the Institute of Practitioners in Advertising​ (IPA) highlighted a growing preference for the utilisation of specialist agencies and suppliers as part of a marketing services structure, rather than a single or small number of large integrated agencies. The two structures identified as having the highest growth potential were the Engineer model and Hybrid model.

The ‘Engineer Model’ involves the overarching marketing strategy being developed by a single external agency, while the execution of the strategy is undertaken by a multitude of agencies. “This is expected to be one of the most significant growth models over the coming decade,” the report predicted, because the model provides “access to the best talent and capabilities in the marketing industry by giving brands the freedom to select the agencies who are best placed to deliver each individual element of the strategy.”

The other model predicted for significant growth was the Hybrid Model, where a combination of in-house capability and external agency services are utilised for both the development and execution of the marketing strategy. This combines the cost savings and business strategy alignment that in-house services provide, but also optimises overall marketing functions by utilising agency services for the areas of weakness identified within internal capabilities.

The good news is that there is a burgeoning ecosystem of talented, nimble creative suppliers who can support these structures and the inherent preference for working with a range of specialists. Already a trend in recent years, COVID has accelerated the growth of smaller independent agencies and creative suppliers, through job losses within the agency sector and a growing preference for independent work.

These sorts of frameworks, however, are in direct contrast to procurement’s vendor consolidation strategy, so approach and thinking will need to adapt to play a key role in enabling this structural change. One Australian Retail CMO highlighted the challenge: “When you’re trying to transform your business, all of the traditional procurement benchmarks and indicators fall short. I find procurement departments tend to struggle to cope with change. If they just drive governance then there is a huge divide.”

But even the most forward thinking, flexible procurement departments will need the support of marketing technology, particularly technology that enables the efficient collaboration with an increasingly fragmented network of marketing services suppliers. Without this technology the cost and time required to set up and manage a larger network of vendors would be prohibitive and undo a lot of the great work that’s already been done to drive cost and efficiency improvements.

Procurement can negotiate the best terms for their business with each platform, while marketing has control over their own budget for each project and can make informed choices about the best specialist partners to utilise for execution. There is no new supplier set up and legal contracting, project management, milestones and payments are all handled using platform tools and efficient workflow.

The flexibility offered by adopting these platforms as part of an ongoing structure also keeps control over fixed costs and enables an agile approach to scale, providing a model that can adapt to changing market conditions and business priorities. In today’s fast paced, complex business environment this has never been more important.

There is a truism that you see the best of an organisation when it is under pressure – and this has been true for many organisations during COVID. On the whole, most organisations – and marketers – have risen to the challenge, and we’ve seen outcome prioritised over process. Necessity has driven flexibility and collaboration.

But it’s also highlighted what is possible at pace, and the impact of outdated processes that don’t support the needs of the business. Reverting back to the old ways of working has become even less palpable for marketers who’ve seen the benefits for agility and efficiency – two requirements enhanced by the unpredictability of COVID, but which had already grown in importance with digital disruption.

Moving forward, there is undoubtedly a need to better align marketing and procurement to improve the working model. There is an opportunity to build on the recent gains made through COVID-driven necessity, and to do away with outdated processes that no longer serve the business. A structure and model that has technology powered human creativity and collaboration at its core can go a long way to helping achieve that.

Mick Entwisle is the CEO and co-founder of Genero.


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