A growing number of businesses are looking to drive growth by cutting costs and optimising spend. In this context there is an increasing amount of pressure on marketing and procurement to work together. Traditionally, there has been some scepticism regarding these functions collaborating given their respective mandates.
4C brought together a selection of professionals from several sectors to determine whether procurement stifles marketing’s creativity. Cameron Holder, Manager at 4C Associates, debated that procurement does not hinder creative thinking, whereas Alexandra Ranson, Managing Director at Specialmoves, argued that, despite best intentions, procurement gets in the way of effective marketing activity.
Why Procurement isn’t Helping Marketing Creativity
The current business and economic environment poses challenges for all sectors and all disciplines. Marketing is no exception: spend is increasingly being scrutinised to ensure resources are put to the best possible use. Monitoring whether marketing is delivering a decent return on investment is essential: there is no point attacking cost without knowing whether what you are spending money on is working.
“Marketing does not live in a bubble which should be immune from budget constraints. We need to be just as responsible and accountable as every other department.”
Predicting ROI of marketing spend is not easy. If you are buying electricity, for example, a certain investment will deliver a defined amount of watts, which will keep a known number of lights on. There are no such certainties in advertising, marketing or PR, partly because most effective marketing requires differentiation, innovation, and personalisation.
Standardisation and repetition makes spend requirements easier to predict, but the results will be affected. In this environment, procurement managers are not in a good position to determine what represents value for money.
“Procurement will ask questions such as: “How much does a standard website cost to build?” Creativity dies when you limit your scope and budget to a rehashed asset or campaign.”
Expensive procurement processes are also a problem. 95 per cent of marketing agencies are SMEs and cannot afford to spend more hours replying to an RFP than they will be paid for, even if they win. Some of the most creative, flexible, dynamic agencies are ruled out by long, complex procurement processes which only large networks (with big overheads) can afford to participate in.
Procurement also damages long-term relationships with agencies by pushing for regular retenders and repitches. These can be very expensive (for both sides), disruptive, damaging to morale, and distract from every day delivery. Once selected, agencies will try to claw back these costs by any means available, wiping out any apparent commercial gains that procurement has negotiated.
The worst way to help marketing achieve better ROI is to push for more procurement involvement. Procurement should step back from the process, while marketeers make drastic improvements in the way their teams manage agencies and measure results.
Procurement does not Stifle Marketing’s Creativity
The idea that procurement and marketing cannot work together is outdated. Procurement is there to help marketing do its job and allow each function to focus on what it does best.
Pitch management is one of the areas where procurement has the tools, expertise and time to add substantial value. Procurement increases resources dedicated to the pitch, so marketing can consider a greater number of agencies. Relationship management is another area where collaboration between the functions can be fruitful. Procurement can ensure robust contracts are put in place and guarantee that each party is clear on what the final objective is.
“Marketers are not bad negotiators, the problem is agencies are good at making it easy for marketing to give them work that’s profitable to the agency. Procurement can check the money is being spent as expected and renegotiate if requirements have changed”
In addition, the function can carry out regular proactive reviews throughout the duration of the contract, to make sure any issues are flagged up as soon as possible. This avoids the need for reactive reviews, which are carried out after something has already gone wrong.
“Sometimes someone has to be ‘bad cop’ in disputes. Procurement can do this so that marketers can carry on without their day to day relationship with the Agency being too affected”
Another vital but often overlooked contribution which procurement can make, is obtaining support from finance. Not only will marketing benefit from having an objective voice on side when discussing budget, but procurement also “speaks the same language” as finance. This collaborative approach adds credibility to marketing’s requests for reinvesting savings rather than stripping them from the budget.
“Collaboration between marketing and procurement benefits both sides and allows for the creation of a solid relationship with external agencies”
The debate was opened to the floor with concerns expressed regarding the extensive involvement of procurement in the RFP process. Attendees provided several examples of large organisations whose RFPs required an excessive amount of work and in one case, even charged a fee. Alexandra called for marketers to improve their performance management capacities to avoid the need for procurement to be so heavily involved.
At this point, participants called for a distinction to be made between good and bad procurement. It is undeniable that excessive involvement and concentrating purely on spend can only serve to stall creativity. Cameron pointed out that this did not reflect best practice procurement and that the function’s involvement in the RFP process should focus on commercial and risk factors.
One participant disagreed with Cameron’s view that procurement should steer clear of the creative process. A lack of involvement in the creative rationale results in an uninformed debate between both functions. Cameron replied that in his experience, each function was perfectly capable of working to their strengths and that procurement’s involvement in the creative process would hinder progress.
The motion was amended to “Does ‘good’ procurement stifle marketing creativity”. The floor voted against the motion.