One of the most popular Procurement job openings in the UK these days is for the Marketing spend category. It is one of the last areas touched because any cost saving idea without a change in product could still dramatically impact levels of sales, and few managers have yet dared to play with it. But following the success that many large multinationals are having, it seems that finally the rest of the world is starting to follow. Despite this, others have gone the opposite way by closing off their central Marketing Procurement departments. It is a fickle spend that requires careful treading, but if done properly, you can reap fantastic results.
I was part of the first batch of Marketing buyers at P&G. As they only promote from within, all buyers in this team came from Raw & Pack and there was a lot of hesitation from all parties on what we could do. Everyone feared we would damage relationship and impact creativity and therefore sales, but we
quickly earned their respect. We proved that we were there to bring them value without all the negative consequences they were potentially expecting.
If you do not have the resources to hire an experienced Marketing buyer, or you decide to develop one of your own, follow our tips to maximise your chance of faster success. This article is split up in two parts – in this issue we look at the first steps that you and your team can start with, in order to set up the right sourcing strategies. The second part of this article, coming soon, will cover tips on identifying opportunities.
1. Sponsor support is key
Marketing departments have gotten used to doing what they want. If you come in as a buyer and ask them to involve you early on in their process, then tell them who you think they should be working with it will rarely go down well. Hence it is very important that there is a highly recognised sponsor in management who will push the initiative and get the brand teams to work with you. The image that should be given of the Procurement team should be one of Supporter and not of Enforcer. As we are usually seen as harsh cost-cutters or even as “the police”, there tends to be the negative associations of reduced quality, creativity and sales. However, we need to reassure them that not only will they not happen, but that we will be able to stretch their budgets and help them do more for less without compromise on the mentioned criteria. A nudge from above will help ensure you get their initial collaboration, until
you have proven your worth and they naturally prefer to come to you.
2. Give the appropriate importance to the right stakeholders
You need to have a very clear understanding of how many parties are involved both internally and externally. For example, for a printed ad you might have internally the Brand Manager and the Advertising Production Manager, then externally the Advertising Consultant who actually represents your company, and the main Creative Agency, the Production House, Post-Production House, Photographer and Creative Re-toucher. These five latter ones could be fully integrated into the main agency, or completely separate companies that subcontract and/or influence each other.
If you are trying to reduce the retouching costs, who should you be talking to?
Despite the Brand Managers having the last word on an initiative, they will not necessarily be the most important stakeholders in your work. The Marketing teams tend to rely on the Advertising Agencies, those external parties who they can usually blame if things go wrong, but whose word is also what goes as they are the experts at helping our company get more clients. Hence it is very probable that the people you will need to talk to the most often and in their own language are these agencies. They influence our internal stakeholders heavily and are also the gatekeepers to reaching the 2nd, 3rd or even 4th tier suppliers. They depend on revenue flowing in from different fronts that you will most surely be touching, so their buy-in is crucial. Because each company is different, you need to pinpoint early on who the most influential stakeholders are. Make sure you learn their lingo fast and you
talk to them in a way that they will easily understand what is in it for them. The rest will then follow.
3. Identify what the value add chain looks like
The Creative Value Chain is usually much more complex than our typical Supply Chain. When you first set up this new category you should be spending a
considerable amount of time identifying what the full process for the different initiatives looks like, who are all the relevant parties at each touch point and
subcategory, where is value created and money wasted. Sourcing for an event will be as complex and yet very different than for a TV ad. However something as simple as identifying where endless rounds of retouching can be limited to 3 rounds if implementing a detailed brief form can easily bring you 15% savings.
4. Interview, interview, interview
Good communication is always important but with this category even more so. You will be covering many different sub-categories and markets, whose importance may go up or down depending on the project. Understanding what makes your suppliers tick, what the real need is and most importantly, under which circumstances can generic solutions be implemented vs. what represents an exception, will allow you to identify together an acceptable action plan that will gain Marketing’s trust. This function must feel that they can still use that star photographer for an important project while you continue to help them reduce costs with all other photographers. Similarly, if the Ad Agencies feel that you won’t be touching their profit (at least not yet), they will be more willing to help you reduce costs. Ask them all what, in their opinion, should be (a) continued, (b) started and (c) stopped. Dig into the details of processes and get them to identify the reasons of why they think costs cannot be reduced. During a conversation with a counterpart, he mentioned that some of the reasons of why we couldn’t have a set of common Creative Retouchers for all agencies were that (i) creative quality was subjective and (ii) whatever he saw at his agency, under his lighting conditions, could be very different to what his equivalent in another agency would see under their own lighting.