Marketing and Procurement: United we Save

In anticipation of ISM2018, the Strategic Sourcing team at Source One have announced a new podcast series. Every week, consultants from the leading Procurement Services Provider will discuss popular topics from the conference's agenda.

This week, Senior Consultant Megan Connell joines us to offer her tips for promoting collaboration between Procurement and Marketing. Take one look at ISM2018's agenda, and you'll see that Procurement's image within organizations is a hot topic. Connell gets the conversation started a little early by providing the best practices she's employed to communicate Procurement's strategic value and encourage buy-in from Marketing departments.

Haven't gotten a chance to listen? Here's a transcript of the episode:

Source One: The Institute for Supply Management’s Annual Conference is fast approaching.  On May 6^th, thousands of industry professionals will gather in Nashville, Tennessee to network, exchange best practices, and discuss emerging trends. 

Here at Source One, we’re getting ready for the year’s premier supply management conference with our new series: ISM2018 Session Insights.  Tune in every week to hear our experts discuss the topics that promise to dominate the conversation at this year’s conference. 

This week, we’re joined by Source One Senior Consultant Megan Connell to discuss strategies for bridging the gap between Marketing and Procurement departments.  Historically, Marketing and Procurement aren’t known for working in tandem.  Many companies still the unique spend category off-limits to their Procurement teams.

In her time with Source One, Megan has excelled in promoting collaboration between these former adversaries.  Her efforts have helped a number of organizations reassess Procurement and reconfigure their approach to Marketing Spend.

Let’s start with the basics. When a company comes to Source One for help with Marketing spend, what specifically are they hoping we can provide?

Megan Connell: There are a number of ways companies might come to us looking for Marketing support. Sometimes it's the Marketing team themselves or someone who works on their behalf. They might be looking for our help running an agency search, reviewing one of their brands, obtaining benchmark data in different categories, or potentially looking for ways to extend their budget. In other case, Marketing may just be grouped in with other categories that our team is supporting.

S1: Have companies been surprised to learn that we can help them in what's sometimes an off-limits category?

MC: I wouldn't necessarily say they're surprised we can help. It's the breadth of our Markting experience and our ability to impact strategic areas like agency searches that's sometimes a bit of a surprise. 

S1: You mentioned extending budgets, could you describe what the spend profile of your typical Marketing department looks like?

MC: There is no standard profile for a Marketing department’s budget. Each company’s Marketing budget will look different depending on their industry, target audience, product profile, and the different tactics they use to deploy campaigns. There are certain similarities and trends we will see within industries, but strategic priorities and campaign tactics are unique to each company. 

That's why we'll see such differences in spend breakdown. The spend profile, however, only tells a portion of the story. It's important to understand how the Marketing department operates, what their strategic plan is, and reach an understanding of how we can support those activities.

S1: So, what’s the rest of the story? What makes Marketing so different from other categories?

MC: Well, on Marketing, there are a lot of intangibles that factor into decision making. Suppliers aren’t bidding on a specification. It's not a matter of comparing products side-by-side. There are other elements beyond the proposed cost that could make one supplier better than the competition.

You can’t put a dollar figure on how an agency understands the brand image of a company or the impact their creative work may have. This adds a layer of complexity to any sort of Sourcing process that you wouldn’t see in many other categories.

S1: How does that complexity impact sourcing engagements? What, for example, distinguishes a Marketing RFP?

MC: In Marketing RFPs, you are looking to collect proposals that include creative work and can demonstrate the sort of brand understanding I mentioned earlier. Those will be a primary factor in decision making. Your'e still requesting pricing and qualitative information on the company's background, capabilities, and account management team. The key differentiators, however,  might come down to how well the agency understands your brand and demonstrate their creative work. 

S1: And how does Marketing typically perceive Procurement? I would imagine issues like brand identity can lead to uncomfortable conversations.

MC: Marketing's goal is to improve sales/revenue for their company, but it is not always easy to show how their activities directly impact that bottom line. That means they're sometimes put in a position where they have to defend their budgets or spending activities. So, in organizations where Procurement is still considered a “cost cutter” or "price slasher," Marketing might be especially resistant to working with them.

That being said, the perception of Procurement within Marketing has improved in recent years. Organizations that have had success in Marketing Procurement are those where the Procurement group has made an effort to understand Marketing. They're not just looking at budget figures and trying to find a way to minimize spending, but taking the time to understand existing supplier relationships and the strategic value they provide the organization. Additionally, they've  changed the topic of conversation from 'reducing spend' to 'optimizing marketing budgets' and finding ways to extend their Marketing dollars further.

S1: What else complicates the relationship between the two departments? Why might Marketing be especially wary of Procurement’s influence?

MC: In my experience, the biggest roadblock for a successful relationship between Marketing and Procurement is that they don’t understand the other's goals and objectives. If Marketing only views Procurement as a tool to reduce cost, they will never see the added value they can bring to decision making and supplier management. On the other hand, if Procurement doesn’t understand the strategic nature of Marketing's supplier relationships, they will not be able to adapt their process and work collaboratively with Marketing teams.

S1: From the sound of it, many Marketing units are hesitant to even engage with Procurement.  What are some strategies you’ve employed to initiate important conversations?

MC: One of the things they we focus on when engaging with Marketing groups is using terminology that will resonate with them. So, using terms like 'agency search' as opposed to 'agency RFP.' Also, talking about savings will only deter them from wanting to collaborate, but changing the conversation to focus on optimizing budgets will help to facilitate a discussion.

Making an effort to understand how Marketing uses their different suppliers and the strategic nature of these relationships will also help improve your relationship with the department. By acknowledging that a supplier has a strategic position within their organization,we give the stakeholders peace of mind. They can feel confident that we understand their needs and aren't just looking to deploy a campaign for the least amount possible. It's all emphasizing that we want to work with them and not disrupt their operations.

S1: If we’re not talking in terms of savings, what are some of other benefits that might appeal more directly to marketing’s goals?

MC: In our role, we are often tasked with finding savings in Marketing budgets. From that perspective, we have helped our clients to identify significant savings with their agency partners. In some cases, this can be as simple as improving transparency into pricing agreements that are already in place.  

I think one of the biggest benefits we can provide to our clients is introducing them to different players in the market. As an outside perspective, especially as consultants, we can find different agencies than the ones their team may be used to working with. These agencies can bring new and innovative ideas on how they tackle a category or vision for a brand.

S1: It seems like misunderstandings are a common theme when Procurement and Marketing don’t get along.  How can Procurement professionals work to familiarize themselves with the category?

MC: My recommendation for Procurement professionals would be to start reading different market intelligence and publications from both marketers and agencies. That way, you can familiarize yourself with the terminology and categories within the Marketing space. Beyond that, it's essentail to work alongside the Marketing team so that you can understand their strategies and decision making processes.

S1: And one last question, what qualities must a Procurement professional possess to succeed in engaging with Marketing?

MC: In order for a Procurement professional to be successful in the Marketing space, you need to understand that decision making may not always come down to who scores the highest on a scorecard, or who has the lowest cost proposal. Things like creative and strategic work, understanding of a company’s brand, innovation, and just general cultural fit can be the determining factor in how a supplier is selected. 

As Procurement professionals, our role is to help the Marketing teams make their decisions by providing them with all of the information necessary to do so.

S1: Thanks, Megan

MC: Thank you.

Be sure to tune in every week for more ISM2018 Session Insights. Planning on attending the Annual Conference? Don't forget to visit Booth #729 and attend the sessions hosted by Director Diego De la Garza and Strategic Sourcing Analyst Kaitlyn Krigbaum.