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Issue 05 October 2009 |
TheONEThing
If you do one thing this week:
It is the start of budgeting time for most businesses and most will no doubt be looking at ways to make their money go even further than this year. Media prices will continue to deflate in 2010, so now is the time to review your marketer’s objectives and identify how you can help them make the most of the cheaper media prices.
Important
Developments
- Internet spend outstrips TV for the first time – across the first half of 2009, spend on the internet, which includes search as well as banner-type advertising, overtook spend on television. Internet advertising was the only sector to grow, driven by search, while ad spend on TV continued its downward spiral – over 16% or £1.5bn less than the same period last year! This milestone had been predicted for some time, but adds another worry for all the TV broadcasters. It is worth remembering though; TV currently represents extraordinary value, with costs on a par with 9 or 10 years ago.
- UKOM, the UK’s online measurement company formed in December of last year, as decided to use Nielsen data as part of their measurement service expected to launch in January 2010. Advertisers such as P&G, Unilever, Honda and other have been pushing for improved measurement and have given their approval to the methodology. This research will be able to provide reach and frequency data and will therefore allow comparisons and combined planning with other “traditional” media. This will inevitably be a very useful metric for advertisers, as it will enable them to understand internet advertising’s delivery using metrics they are used to elsewhere, but it could lead to a more blanket-approach to online advertising, rather than utilising the excellent targeted , but less measureable, opportunities the internet provides.
- The national press market continues to suffer, with Associated Newspapers (Daily Mail and Mail on Sunday) reporting a 21% drop in ad revenue across July and September. Also, the IN&M, publishers of the seemingly ill-fated Independent and Independent on Sunday has managed to agree a temporary deal with its banks and bondholders until the end of October. It still seems unlikely that the titles will be around, at least in the same format, much in to 2010 though.
Marketing and Procurement: a happy partnership?
By Tony Squires
The involvement of procurement within marketing has definitely changed over the last few years, with some very visible examples of the impact achieved. For example, Rick Hughes, the VP of global purchasers at Procter & Gamble recently received the 2009 Procurement Leaders Excellence Award for a marketing and advertising agency spend project. You also know that procurement is having an impact when Martin Sorrell, the CEO of the world’s largest marketing communications group, WPP, complains that the growing involvement of procurement and their “aggressive” approach to contract negotiations has contributed to his company’s worse-than-expected Q2 performance. For those of you who want to know how tough you are being, City analysts are expecting his company’s margin to be down almost 10%. But outside of the headlines, do your marketing colleagues really understand the value of procurement, particularly with the rapidly changing media environment and current financial uncertainty?
The Credibility Gap
A recent study by 4C Associates and the Procurement Leaders Network has identified some unique insights in to the challenges that global procurement functions face. Interestingly, most procurement departments believe that they are not engaged early enough and that there is a lack of understanding of procurement. Other departments, on the other hand, still view procurement as overly focused on simple cost reduction and compliance instead of value. In addition, other departments see procurement staff as lacking specific category knowledge and expertise (and this is particularly noticeable within the marketing category). This difference between the perception of procurement and the work they actually do has become known as the “credibility gap”. Fortunately, there are a growing number of examples where things do work well and where this is the case, the key difference is that the procurement teams have built a close and credible relationship with their colleagues in other departments and are actively sought out for their market knowledge and category insight.
The whole is greater than the sum of the parts
This credibility gap isn’t only the preserve of complicated areas of spend such as marketing. There appears to be a general lack of credibility right the way up to Board level, even in large global corporations. The CPO of one top 500 global company stated that “despite the importance of procurement, we find it difficult to get the support for procurement strategy development from the CEO and his direct reports.” And here your CMO colleagues may have some sympathy. It is increasingly difficult for marketing to demonstrate its worth to the business, with constant challenges from the Board and especially finance to justify its budgets. There is a big opportunity here for the switched-on procurement managers – if you can help your marketing colleagues deliver their business objectives while also making the finance guys sleep easy knowing everything is under close control, you’ll have a supporter for life...
So what can you do to increase the appreciation of marketing procurement?
- Understand the extent of the credibility gap
- Do you understand the marketing team’s objectives and business expectations and how they are measured?
- Are your objectives aligned?
- Be honest about your strengths and weaknesses
- Continue to develop your strengths, but bring in help to overcome your current weaknesses
- Develop a clear plan for addressing the credibility gap and become their trusted advisor
- Actively review new marketing channels, identifying potential opportunities – mobile is an area where significant advantages could be gained currently
- Work with your senior marketing colleagues to identify how you can assist them in achieving their objectives within the expected budgets
If you would like a copy of the full research report “The Changing Face of Global Procurement”, please email caroline.ruffell@4cassociates.com.
Finally, we are currently offering 15 minute ‘discovery calls’ at a time to suit you; a quick way to talk to someone who can give quick insights to your current challenges. Every Friday at 2pm, it’s free and we’ll call you. Please email me to arrange on tony.squires@4cassociates.com.
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