WFA launches ultimate guide to value-based Marketing Procurement
Global Sourcing Board identifies real-world strategies that drive shift from savings to value
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WFA has published a first of its kind guide to transforming the actions and perception of marketing procurement.
Based on two years’ intensive research and co-authored by procurement leaders at some of the world’s biggest companies, Project Spring: Revolutionising the perception and contribution of marketing procurement is the most detailed guide yet to making the shift from a simple savings approach to value.
The publication is particularly timely with marketing departments under pressure to reduce spend as a result of Covid-19 driven budget cuts. Written by the 12 founder members of the WFA’s Global Sourcing Board, many of whom work for some of the world’s biggest advertisers, the goal is to ensure that marketing procurement teams have the tools to take a value-based approach rather than revert to a race to the bottom on price.
The report was triggered by WFA research in 2018, which found that although 87% could not imagine a world without marketing procurement, 92% of respondents feel that the way marketing procurement is perceived by their organisation could be improved.
Since then the Global Sourcing Board has been working to identify solutions and practical steps that marketing procurement teams can take to improve internal perceptions and transform their role from primarily driving savings or negotiating contracts into a more strategic role.
Ever since marketing procurement emerged as a discrete discipline more than 25 years ago, there has been a suspicion that the traditional procurement approach cannot be applied to marketing agencies where outputs are not repeatable and the impacts are hard to quantify and thus value.
Project Spring, launched by the WFA in 2018, was designed to help the industry solve these challenges, identifying more meaningful and aligned KPIs and approaches and outlining how the profession can provide strategic value to their marketing counterparts as well as the finance department for the benefit of the whole company.
Being recognised for delivering a wider set of benefits than mainly cost saving depends on different factors. The key areas for a value-based approach outlined in Project Spring are:
Process: Marketing procurement needs full visibility on total marketing spend because increasing visibility enables the team to view the company’s marketing investments as a whole and enlarge the value marketing procurement can bring. Around half of global teams to do not get involved in projects that are worth less than $75K. However, lowering the threshold for involvement of marketing procurement boosts interaction between marketing and procurement teams, leading to a closer and more collaborative working relationship. Finally, just under a third get involved in budget planning. Research shows a clear correlation between the point at which the marketing procurement team is involved and whether the business sees the team as adding broader value.
People: Half of marketing procurement teams report into Supply Chain and 34% report into Finance. Data shows that marketing procurement teams who report into Finance are less likely to be seen as adding broad value to the business. However, as organisations adopt a more flexible matrix management approach, the importance of reporting lines is becoming blurred and the creation of cross-functional teams is recommended to overcome these types of challenges.
Teams need to ensure relationships within an organisation are not siloed. Companies that organise training programs for stakeholders perform markedly better than those that do not when it comes to appreciation by those stakeholders. Identifying gaps and striving for larger investments in learning and development, for all functions (marketing/procurement/finance), correlate with better perceptions.
Performance: There remains a significant reliance on cost reduction and cost avoidance as core metrics. Procurement must ensure that their metrics look beyond price and capture wider, often less tangible benefits brought to the business such as a contribution to top line growth sales, the development of successful agency relationships or the reduction of business risks.
Procurement metrics do not always resonate to marketing as they seem to serve an isolated goal from theirs. Data shows that working towards bridging the gap, talking in joint performance language, and sharing business goals dramatically increases the positive perception of marketing procurement.
Finally, creating a procurement metric that supports an overall business challenge and drives meaningful changes within the industry, such as a metric assessing the compliance to human rights within the whole supply chain or the amount of supplier diversity spending, boosts the credibility of the discipline.
Partners: Changing the way marketing procurement perceive agencies is essential to evolving the perception. Agencies are not simple vendors; they are an extension of the internal marketing team and can have an important impact on the company’s business KPIs. Marketing procurement should play an active role in ensuring the success of the work performed by agencies working on their account.
A well-managed agency is an obvious competitive advantage for clients and is a mirror of a successful marketing procurement function, able to orchestrate top-level enterprise discussions. Investing more time in Supplier Relationship Management programs to unlock value will demonstrate to marketing counterparts that the team wants to help them get better outcomes from their agency partners.
“The future of sourcing is in adding value beyond savings. It should be not just a business partner that shares objectives with colleagues but also a source for growth within the organisations. It can only be these things if there is a shift from a primarily savings outlook to a value creation approach. Project Spring brings together the best thinking on marketing procurement and should be an essential handbook for all practitioners, whatever the size of their organisation,” said Laura Forcetti, Marketing Sourcing Global Lead, WFA.
The WFA’s Global Sourcing Board was created in May 2019 with the following founding members: Barry Byrne, Senior Global Procurement Director, Sales & Marketing, adidas James Taylor, Global Procurement Director, Media, Digital and Consumer Planning, Diageo, Magid Souhami, former Global Sourcing Director, General Mills, Jose Gonzalo Bisquerra Mora, VP Marketing & Sales, Global Procurement, GSK, Ekaterina Agafonova, Global Strategic Sourcing Director Commerce, Heineken, Michael Pues-Tillkamp, Head of Marketing Procurement, IKEA Retail (Ingka Group), Myriam Bénichou, Global Marketing Sourcing Director, L’Oréal, Christopher Kredo, VP Commercial – Global Demand, Mars Inc, Tracy Allery, Associate Director, Global Procurement, Agencies & Marketing Excellence, Mondelēz International, Alex Morse former Procurement Manager – Media, Nestlé, Jennifer Mclachlan, Director, Brand Building Purchases, P&G and Tuomas Anttila, Director, Global Marketing Procurement, Unilever.
“Whilst not doubting the real challenges faced by colleagues in the industry, I think the key to overcoming these is for marketing procurement to ensure that we are fully aligned to the business objectives rather than any specific particular functional measures. Procurement teams need to stop using words like ‘stakeholder’ when referring to internal colleagues and instead talk in joint performance language around shared goals.” - James Taylor, Global Procurement Director, Media, Digital and Consumer Planning, Diageo
“The role of marketing procurement, as all other supportive functions, is to enable business outcomes – which to me often means how can they help me find the best agency talent to ultimately drive growth. I believe that a successful marketing procurement team actively works on more sophisticated means to track and measure agency performance and delivery above and beyond a cost discussion. There will be many metrics to look at and probably not a single one, but ultimately procurement metrics should be focused on growth and the ROI, both long and short term, of marketing investment.” - Beatrice Lindvall, Global Media & Digital Director, JDE
“The word ‘sourcing’ is directly associated with buying or procuring a solution, and in an industry where Talent and Growth are everyday key words, I would like us to challenge ourselves and explore moving the conversation from ‘sourcing’ marketing services to ‘resourcing’ an end to end ecosystem of Talent for our account, incentivised to drive the Growth of our business." - Jose Gonzalo Bisquerra Mora, VP Marketing & Sales, Global Procurement, GSK
“It is hard to know who is from procurement and who isn’t. This is how it feels at GSK, where procurement is embedded in teams from top to bottom as a trusted business partner helping drive our growth agenda. Our productive relationship has been built over years, with a relentless focus from delivering brilliant basics on category management to leading strategic efforts e.g. how to better resource our marketing organisation with partners, an extension of our team, in the pursuit of building meaningful and distinctive brands.” - Tamara Rogers, CH Global Chief Marketing Officer, GSK
“Commercial procurement is increasingly a vital connector between the fast-evolving points of the marketing ecosystem. We have come a long way and are ready to offer expertise, knowledge, and innovative solutions to our stakeholders. We also see our role as creating trusted partnerships and keeping the relationships between our partners internally and externally balanced and prosperous.” - Ekaterina Agafonova, Global Strategic Sourcing Director Commerce, Heineken
“Marketing sourcing should be seen as a world-class GPS for all our partners: our role is to help internal as well as external stakeholders better navigate within our organisation and strengthen partnerships between all parties involved.” - Myriam Bénichou, Global Marketing Sourcing Director, L’Oréal
“Good procurement means good business partners, and the best partnerships have well-defined roles. We begin with the objective: growth, ROI, simplification for brand teams, creative effectiveness, high-quality & cost-efficient content, and on and on. The specific objective is not as important as the alignment with the business. With that, we can define our partnership. To achieve this objective, what will each of us do to deliver it? How do we support each other? Because your success is also my success. This is not a RACI; it is a contract.” - Tracy Allery, Associate Director, Global Procurement, Agencies & Marketing Excellence, Mondelēz International
“What we do in marketing procurement is to buy capabilities for stakeholders in multiple ways. We help identify what capabilities our business needs – today and in the future, and how we are going to bring these capabilities in.” - Christopher Kredo, VP Commercial – Global Demand, Mars Inc.
“Marketing procurement is a specialized capability that is first and foremost rooted in shared objectives with our internal business partners. We must clearly define what is needed to advance business deliverables – largely capability, cost, and speed - paired with the agility to flex each of those levers appropriately depending on the circumstances. Where businesses share common agendas, we can leverage our ability to see across to develop common platforms or scaled solutions that meet the greater good, while not diluting the benefits at a brand or category level.” - Jennifer Mclachlan, Director, Brand Building Purchases, P&G
“Marketing Procurement has evolved over time, or perhaps it’s more accurate to say that Marketing has evolved in its approach to Procurement over time. With the benefit of hindsight, we can say that greater accountability was needed, and Procurement was able to provide it. We can also say that Marketing is now better understood by Procurement, and with that enhanced specialist knowledge, there is a constructive partnership underpinned by a healthy dialogue.” - Gerry D’Angelo, Vice President, Global Media, P&G
“Procurement has often been blamed for driving costs down and this when dealing with agencies has been a one-way traffic system where the pain is taken by agencies, but the gain entirely goes to the client. The role of marketing procurement is to ensure that value is delivered for the client company and for the agency partner. At its best marketing procurement ensures that the rigour and discipline of contracting with agencies results in business growth and a fulfilling relationship for both partners, now more than ever we need great marketing procurement to deliver.” - David Wheldon, CMO, formerly RBS
“Unlocking growth that is responsible, profitable, consistent, and competitive, must become the number one metric going forward to drive the right behaviors across our marketing ecosystem and have all aligned behind a common goal. It’s imperative we focus jointly on the purpose of what marketing is meant to drive, and jointly unlock value and growth. This should not just be the goal but also the mission and purpose of marketing procurement teams of the future.” - Luis Di Como, Unilever EVP Global Media
“We believe that procurement and therefore marketing procurement, cannot be fully successful without a clear and meaningful purpose. It is this clarity around purpose that should form the foundations for the function, and it starts from revisiting and evolving how we consider the value we can deliver.” - Tuomas Anttila, Director, Global Marketing Procurement, Unilever
The new guide can be downloaded at www.wfanet.org/projectspring