The CMO Council’s report on “Smart Spending At Speed. Is This Real?” produced in partnership with KPMG LLP found that CMOs who get the company’s procurement department involved make better marketing decisions.
“When marketers partner with those in the procurement department it makes processes more efficient and move faster,” says Bret Sanford-Chung, managing director, marketing consulting at KPMG LLP. “These folks do everything from negotiate everything from buying copier machines to determining agency fees. They oversee technology, hardware, software investments and more.” They ensure that marketing spend remains efficient.
Sanford-Chung says that it is important to get the procurement department involved early in the process, which is something many marketers don’t do.
“Marketers frequently view procurement as slowing down the process because those in this department will go in and negotiate based on lower prices,” she said. “Most marketers believe their aspirations do not align. Procurement wants to get the cheapest price. Marketer want to get the best work.”
Marketing departments that get procurement involved early and use them as a strategic partner gain better outcomes, she said. They also over index on more innovative marketing techniques.
A unnamed marketing leader at a global technology company told Sanford-Chung that with the help of procurement, “we ended up saving 25% to 30% in hard dollars. A lot of these cost savings were rolled back into the media budget.”
The major challenge, only 26% of marketing leaders actively partner with procurement in the identification, selection and negotiation of marketing vendors. This represents a sizable opportunity for marketers to leverage procurement services.
Some 71% of marketing leaders who limit or avoid procurement involvement say procurement doesn’t understand marketing, particularly with creative agencies and services. This identifies a need for procurement professionals to learn how to better evaluate marketing vendors.
About 78% of marketing leaders in “very effective” working relationships with procurement tend to also involve digital/e-commerce functional groups in marketing sourcing decisions. This points to a greater maturity in digital.
“B2B marketing historically lags B2C overall because they were more sales driven, not as much driven on marketing, but increasingly they realize B2B buyers today act more like consumers,” she said.
The report suggests CMOs should involve procurement to develop a global and local marketing sourcing strategy and establish sourcing processes, create a framework for identification and selection criteria, performance metrics, optimize MarTech planning, vendor evaluations and contracting for better integration and alignment with the overall digital transformation strategy, review the existing agency landscape and contracts, and to consolidate rates and spend.