The tension between marketing and procurement teams has been well documented, with long-running debates about procurements part in marketing’s outsourcing process or whether they should even be involved at all.
Marketing and Procurement
It seems that relationship is changing though, with more than half of brands now using procurement rather than marketing to finalise agency agreements. A report by then World Federation of Advertisers, which includes the likes of Cocoa Cola and Unilever, found that procurements involvement has increased by as much as 90% over the past 10 years. 51% of brands questioned said procurement now leads the contract negotiation and implementation process – an increase of 8% since 2011. In 11% of cases procurement carry out the process entirely alone.
It’s good news for procurement, as marketing and creative budget has been notoriously difficult to control in the past. Ensuring a positive balance between the two parties is essential though in order to achieve maximum ROI.
Steve Lightfoot, communications procurement manager at the WFA, told Marketing Week: “Marketing is losing its role [in agency negotiations] but marketing is about building brands and finding creative solutions to business challenges, not finding the right remuneration method to pay an agency. This doesn’t encroach on core marketing capabilities, it has not taken over marketing’s creative role. This is the back office stuff of marketing.”
It’s not just about remuneration or driving costs down though. Procurements increased involvement in the marketing process allows creative teams to clearly understand how an agency is performing against key metrics outlined in the contract stages of the process.
“There is a correlation between increased procurement involvement and increased performance incentives. This is about rewarding an agency for doing a job well, not penny pinching or trying to screw the agency out of extra cash,” says Lightfoot.
While procurements level of involvement is up significantly over the last decade, there is still some way to go before the involvement becomes the norm in creative outsourcing processes.