Monday morning arrives and another invoice has been placed on your desk for your review and approval. This is the third invoice and you begin to wonder what services these agencies are really providing. You start asking the following questions: “What am I spending?” “With whom am I spending it?” “Am I getting what is promised?” All valid questions that may not be easily answered by simply looking at the invoice alone. For many organizations, they’ve worked with the same agencies for years and haven’t revisited the contract since first signing along the dotted line. Over time, organizational needs change, contracts become outdated, and marketing spend spirals. So, where do you begin when it comes to getting an understanding of your marketing spend and getting the most value for your budget? – Conducting a Spend Analysis.

Spend analysis is the process of collecting, cleansing, classifying, and analyzing spend data with the purpose of decreasing procurement costs, improving efficiency, and monitoring compliance. For over two decades Source One has helped organizations gain clear insight into their spend and pin point areas for cost reduction, including in the marketing category. While traditionally marketing spend was deemed “untouchable,” procurement departments are quickly being embraced by the organizations they serve as a helpful resource in sourcing marketing agencies with competitive capabilities and pricing.

The spend analysis process begins with data collection, including billing, GL data, contracts, and more to get at the crux of what a company is spending and with what agencies / suppliers. Simply collecting the data isn’t enough, especially when it comes to multiple data sources. Next in the process, is making sense of it all through cleansing and classification. You’ll want to remove redundant data, provide vendor descriptions, and create name consistency. Before jumping into the categorization of your spend, you’ll want to first decide what your categories will be. For example, when assessing your organization’s spend in its entirety common categories include Marketing, IT, etc. From there, the spend can be broken down more specifically.

After collecting, cleansing, and classifying the data, the next step is to identify areas of impactable spend for potential sourcing projects. At Source One, four factors that we consider when ranking projects for certain phases:
  • Amount of spend in the category
  • Number of suppliers in the category
  • Amount of time that has passed since the category was last sourced
  • Areas that can be sourced the fastest (with the least resistance)

Marketing tends to have the highest spend and while once considered off-limits, the amount of competition in the space and room for savings has made this area a hot category for sourcing. Some of the subcategories that still have a large amount of spend in the marketing space and may be ranked as potential target projects are Commercial Print & Promotional Merchandise, Events & Exhibitions, and Photography & Graphic Design. With a complete view of the spend, your procurement department can then partner with marketing stakeholders to develop a cost saving go-to-market strategy.

So, next time that invoice arrives on your desk and you start questioning your company’s spend you’ll know where to begin in looking at your organization’s spend patterns. Not keen on conducting a spend analysis manually and prefer to have cost-reduction experts provide end-to-end support from a spend analysis to opportunity assessment? Source One has you covered. Our spend consultants
can not only provide you with a clear picture of your company’s spend patters but also provide an opportunity assessment to map out cost-saving opportunities.



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Nicole Mahaffey

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