Marketing procurement seeks better, smarter metrics in 2024

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New research reveals that marketing procurement teams at big global brands are frustrated with their current KPIs. In particular they want to broaden the metrics of success beyond savings, with savings as currently defined not enough to prove the team is doing well in the current challenging economic circumstances.

Many feel frustrated that those who set their targets often lack marketing knowledge, only 52% said their target setters had “good” or “very good knowledge” of marketing. The result is that many are being asked to deliver blunt or disconnected objectives that are likely to make it harder for procurement to work effectively with marketers and deliver real value.

Setting and Delivering Targets in Marketing Procurement, produced in partnership with Flock Associates, reveals that half a decade after WFA launched Project Spring with the goal of transforming both perceptions and the role of procurement towards value rather than savings, most procurement teams are optimistic that they can do this.

Eighty five percent say they will add more value, beyond savings in 2024, 13% will add a similar amount of value and savings, and only 2% feel they will add less value than savings.

Based on responses from 51 senior marketing procurement executives at global multinationals spending a cumulative $114bn in marketing annually, the report explores the influence of metrics in shaping behaviours and looks at how marketing procurement plan to deliver additional business benefits in 2024.

Findings show that while media investments have been the main focus for hard savings in 2023 (64% said it was the main driver) and will continue to do so (53% in 2024), many brands are increasingly looking towards creative (19% said it was the main focus, up from 11% in 2023) and production (11% said it would become the main driver, up from 5%) for savings, taking advantage of technology advancements, including GenAI. The key to success for procurement teams is that they ensure they don’t solely focus on media and lose sight of the total picture.

Many targets are based on a simple percentage of media and marketing spend (38%), while a further 9% are based on last year’s achievements. Nearly a quarter (24%) said they were based on their company financial requirements and overall savings targets, with just 15% saying they were based on detailed bottom-up category plans, by marketing category and market.

The vast majority (67%) failed to recognise inflation mitigation as a hard saving, for example.

“This disconnect may lead to challenges for teams as they seek to realise savings and opens them up to questions from CFOs who wonder whether savings are real and can be seen on the company accounts. Addressing these issues is crucial for accurately measuring company profit margin overall and ensuring marketers’ relevance in the boardroom. We need more alignment at an enterprise level, beyond individual scopes, between CFO, CPO and CMO so procurement can work towards optimising company investments, not just marketing budgets”, says Laura Forcetti, Director of Global Sourcing at WFA.

Other findings include:

• Saving expectations for 2024 are higher than 2023 with 1 in 2 organisations expected to deliver 7% savings and above and a further 2 in 10 expected to save more than 11% of their marketing investments. These are both significant increments versus 2023 and indicate a year of higher expectations for marketing procurement teams.
• Annual marketing budgets are expected to increase in 2024, with 32% of respondents saying spend will rise and just 18% expecting spend to decrease. The bigger the advertiser respondent, the greater the proportion who expect budgets to increase.
• Savings are being defined in many ways in different companies. For instance, 8 in 10 organisations consider savings versus last year’s fee as a hard savings, but only 3 in 10 view the difference between the original and negotiated final offer a hard savings. Approach to inflation is similarly inconsistent: 2 in 5 consider inflation mitigation as hard savings.

“In a world where AI could soon be telling marketing procurement how much things cost, marketing procurement could aim to redefine itself as ‘brand investment managers’, helping their organisation shape advertising and promotion investments, revealing new opportunities, reducing waste and driving out inefficiencies. All of these actions will help them become even more relevant to CFO, CPO and CMO”, says Forcetti.

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Not a member? Get a copy of the report here.