There’s a growing appetite among marketing procurement execs to subvert the widely held view that all they care about is getting things on the cheap. While it’s a conversation worth having, procurement’s progression is often undermined by company directives to lower marketing costs, according to a senior procurement executive at a global advertiser. In our latest Confessions, in which we exchange anonymity for honesty, the procurement executive revealed their struggles to balance financial value with marketing objectives.
Excerpts lightly edited for clarity.
How sophisticated is the procurement team in your business?
Being a procurement exec isn’t for everyone. I’ve been at my company for two years, and the managers I had for most of that time couldn’t get their heads around the fact that buying marketing services isn’t the same as buying 100 pens. They would effectively ask us to compare the cost of one agency with another and pick the cheapest one. It completely sidestepped the need for us to know whether the £25 million ($30 million) an agency says it wants for a campaign is the true cost needed to do it or if it’s been inflated due to hidden fees and kickbacks. We don’t understand all the costs that agencies are giving us.
Why does procurement have such a bad rep?
It depends on the relationship I have with my colleagues in the marketing department. If I manage to make a saving on this year’s annual marketing budget, next year’s update will be based on what was spent rather than what was allocated. The problem with procuring services this way is that it makes some in the marketing department reluctant to make savings for fear they’ll lose whatever they don’t spend. Evaluating an agency’s value is the biggest challenge I have. A lot of my internal customers link value to an agency that’s based on a range of intangible points like the chemistry they have with that business.
It sounds like you’re isolated from the marketing team for the most part.
At my company, the procurement team coordinates agency pitches. We send out pitch documents on behalf of the marketing team and we collect all the responses. The problem with this approach is we often get follow-up questions from agency execs who want clarification on the finer points of the pitch that the procurement execs can’t answer. I then have to go back to the marketing team for answers because I lack the insight.
Did that approach have a negative impact on the way you worked with agencies?
We pissed off a few agencies with our old-school approach. One pitch ended up taking so long that one of the five agencies on it pulled out voluntarily. They told us that they believed they were only included as a cost benchmark for the other four shops. You can’t treat an agency like that. What you give is what you get. If we’re only ever using an agency as a benchmark to check whether we’re being overcharged, we can’t be surprised if the best ones decline to work with us.
Wouldn’t it make more sense to have your role based within the marketing team?
Having a dedicated procurement buyer within a marketing team could make it easier for both specialisms to work together. It’s taken me a while to build relationships with executives on the other side of the world who I’ve never seen but have built a rapport with. Other marketers here haven’t been as accommodating. There have been instances where it’s been a struggle to get sensitive budget information from marketing executives as a result of being viewed as an outsider. If I was actually part of those teams, however, it would make those same executives more open to sharing things with me, and therefore, make my job easier.
How did you change internal perceptions of your role?
I thought about how to get the marketing team to see me as a partner who could help them get a better service, not just a better deal. We had a recent incident where a campaign needed to run within days, but our onboarding process took three weeks to sort. I signed off on the budget because the campaign was important and had to run. That flexibility wasn’t there with the old management team. It was hard to win that trust among my colleagues when my boss left when they believed we were only concerned about costs. It never made sense procuring services this way when there’s so much we don’t know about things like programmatic and ad tech that the marketers quickly realized we didn’t know what we were talking about.
Are you starting to focus on procuring more ad tech?
I would like to learn more about the way our media is traded, but it’s handled by another part of the business, so the opportunities for me to do so are rare. For one project, I worked with one of our senior digital executives who gave us a rundown of the industry. They talked us through all the main vendors like digital agencies and content studios and then outlined what they charged. I went into a meeting with my old bosses and felt really awkward because we came across like rookies to digital advertising. I feel like the main marketing teams we have should have a dedicated procurement executive who understands exactly what objectives are trying to be achieved and have the scale to rationalize that with shrewd cost management.