Pre-COVID-19 we saw some significant advances in the role of Marketing Procurement within certain large forward-thinking organisations. The arrival of COVID-19 will either turn the clock back to a cost and savings focus or accelerate necessary change towards value and growth.
Marketing Procurement has increased collaboration with both internal and external stakeholders, developing new thinking to evolving agency models, remuneration models, and creation of strong and sustainable agency relationships.
Progressive companies such as L’Oréal, Heineken, Mondelez and P&G have sought ways to support their agency partners during this time, with the agencies no doubt gaining much greater insight into the value of Marketing Procurement. Their involvement will have provided reassurance to Marketers, leaving them to pursue their strategic and creative agenda with their agencies. Companies are also recruiting Marketing Procurement professionals internally from Marketing or from agencies.
For these organisations it represents an important evolution of the role towards being Marketing’s strategic business partner, helping to improve perceptions, increasing their value to the wider business. However, despite some successes, it remains common for both marketers and agencies to be disengaged from Marketing Procurement. This disengagement should be cause for concern. Central to the issue is them having the responsibility for the commercial relationship with the brands agencies, often with saving targets that report through a chief procurement officer and on to the CFO.
I believe for Marketing Procurement to add maximum value it should report directly to the CMO with possibly a dotted line to the CPO and wider business. There should be no cost reduction target and bonuses not linked to cash savings. I believe the procurement of marketing services needs to be treated differently and there are many procurement professionals feeling the same.
The crux of my argument revolves around a misalignment between Marketing and Marketing Procurement, especially where the savings pipeline remains the central KPI for the Chief Procurement Officer. Despite advances, as we progress towards the ‘new normal’ there is a real risk that Marketing Procurement will take the retrograde step of cutting costs and sending savings straight back to the bottom line.
I recognise advocating this change may be controversial, possibly seen as naïve, but the Marketing is an investment, and like all investments, it needs to be managed. During the COVID-19 outbreak many sectors have had no choice other than to cut investment, however what they do next is in their hands. We’ve seen before the potential impact on speed of recovery and future brand profitability when brands go dark in times of crisis. Cutting is not difficult but increasing efficiency and effectiveness is. Clearly wastage and duplication should be removed, and process improved, leading to savings. I don´t apologise for savings but there is a greater prize to be secured.
My vision sees a “Marketing Operations Effectiveness” function supporting Brand Marketers with a truly shared agenda. This role needs a combination of left (logical, analytical, process and detail oriented) and right brain skills (collaborative, situational aware, intuitive and creative). CMO’s need to generate more value than ever whilst managing increasing complexity. They are adapting to ever greater economic and competitive pressure often requiring more from a reduced budget; whilst needing to keep up with technological advances to quickly adapt to changes in consumer targets and expectations. CMO’s have to justify their investments and need a trusted commercial business partner close to support them as they navigate this complex marketing ecosystem.
Syl Syler, Global CEO of Diageo recently said “CMO´s need to speak the language of growth and return…bringing the consumer insight and flare that make the difference”.
I see massive opportunities in a new structure where the CMO and their Operations counterpart(s) have a truly shared agenda, one based upon a shared understanding of brands and brand building; a shared vision and understanding of business priorities; a belief in sustainable agency relationships; with aligned goals and objectives based upon improving effectiveness and efficiencies.
The beauty here is we will learn from each other and work as a team rather than pulling in opposite directions. With very clearly defined responsibilities and functional alignment, both parties will concentrate on driving business growth, profitability and improving brand health metrics.
I believe this subtle but significant shift in structure will have a positive impact, delivering tangible improvements in business outcomes.