JACK TIPS How Procurement and Marketing Can Work Together to Change the Game

JACK TIPS: How Procurement and Marketing Can Work Together to Change the Game

Six years ago, in Love Your Shark, we boldly posited that far from being a predator out to eat marketing professionals, procurement is in fact a valuable partner to marketing, one able to help make the work--and the bottom line--even better. Since then, the partnership has grown still more. Procurement and marketing have evolved and innovated. And of course, in that same sixyear period the great recession also happened. Many marketers now report that they’re required to spend over 50% of their time on fiduciary responsibilities—leaving them less than half their time to focus on their jobs as marketers. As marketers became even more stretched for time and dollars, they found that they needed procurement in order to succeed. And procurement began to recognize, understand and empathize with marketing. They got to see the tremendous pressures marketing is under, the uniqueness of their world and, frankly, they realized why marketing had been so reluctant to get them involved in the first place.

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Tips and Tricks

Marketing and procurement have made huge strides over the last six years but there are still some real gaps in their abilities to effectively communicate and support one another. To help close that gap, here are our seven Jack tips for procurement and marketing professionals. 1. Call it strategic sourcing, not procurement You know the old phrase “Marketing is everything”? Well, it’s true, especially when dealing with marketers. Calling your offering what it really is—a strategic partner to help source valuable solutions, not a process for buying the cheapest widgets—can go a long way in setting up the proper expectations for everyone.

2. Dedicate a strategic sourcing professional to marketing The first step to becoming strategic is to separate out marketing as its own discipline within the department. You cannot expect to have a positive impact if you merely look at marketing as a spend category and assign a “commodity manager” to it. Procurement Strategic sourcing needs to recognize the unique nature, needs and challenges of marketing and create a dedicated role or department dedicated to becoming an integrated and valued asset to marketing.

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Tips and Tricks

3. Create marketing “procurers” This may sound crazy, but hear me out. Ideally, the person you select for this new and distinct sourcing role should be a marketing person. You will spend far more time (and be far less successful) trying to turn a “procurement” person into a “marketing” person than the other way around. The truth is that marketing people already are “procurement”— they just don’t know or recognize themselves as such. Think about it. Marketers constantly engage suppliers, negotiate engagements and manage relationships. They are better at procurement than any procurement person would ever hope to be.

The marketer also comes into this new role naturally understanding the issues and challenges and has “street cred” with both marketing and suppliers. Additionally, it makes a bold statement to your marketing teams, agencies and suppliers that you recognize and embrace their unique experience. This person will naturally know who makes key decisions and at what stage of the marketing process to get involved. This is a relationship business, so use it to your advantage. A related tip? Sit this new “sourcing” person within the greater marketing team—not within procurement. The day-to-day contact is imperative to creating the necessary relationships that lead to having a deep and intimate understanding of the marketing processes, challenges and needs. Osmosis is a powerful thing! 4. For event marketers: never forget the 20/80 rule Agency fees represent somewhere around 20% of the total spend in brand experiences. The other 80%? Third-party costs.

Typically your agency partners are responsible for sourcing, negotiating, managing and paying for those third-party costs. The single biggest mistake you can make when comparing agencies is only comparing the agencies fees and failing to look at the overall budget to determine who has the greatest ability to manage that third party spend. Consider this: a 5% reduction in the third-party costs is the equivalent of a 20% reduction in agency fees! So in your consideration criteria weigh “price” accordingly. Compare agency fees to one another and weigh that as 20% of their total pricing score. Then compare third-party pricing and sourcing plans to one another and weigh that as 80% of the total pricing score. This means you should absolutely vet and confirm how an agency passes on third-party costs. Is there any mark up? Does the agency receive fees for managing the third party costs? You want to ensure a level playing field concerning these costs so that when you compare agency fees it is truly an apple to apples comparison. JACK TIPS

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Tips and Tricks

5. Partner With Your agency Get to know your agency’s business, and help them to understand yours. Looks for ways to combine the buying power of your company with the buying power of your agencies, so that you have the maximum amount of leverage. We’ve seen these collaborations can result in as much as an additional 10% savings, so it’s absolutely worth trying. Another related tip: Look for agencies that have their own procurement professionals on staff. It is much easier to partner with them, plus you know that this agency takes the management of their third-party costs seriously. 6. Bundle, bundle, bundle Brand experience remains a primarily projectbased business, which means both the clients’ and agencies’ spend is fragmented. This means agencies and their suppliers are rarely able to price from a position of knowledge or strength, so it is a ripe area for innovation. Consider bundling projects together and/or negotiating multi-year agreements to really see the savings start to add up. (Of course,

such deals can be “performance-based” so that you can always make a change if need be.) The key is to bundle projects as strategically as possible to improve your leverage to negotiate third-party spend. This establishes confidence for both the agencies and their suppliers. And the more confidence they have on future project work, the greater their ability to both reduce their costs and negotiate greater discounts with suppliers. 7. Use your data wisely Here’s the simple fact: most of the procurement systems, data and processes that currently exist don’t support the unique needs of marketing procurement. In fact, they are often counterproductive. The good news? A new cottage industry is evolving to bridge the gap between enterprise financial systems and what’s needed to properly managing marketing activities. Many professionals who have been on the front lines of marketing procurement over the last decade are putting their knowledge, experience and expertise to work by creating business solutions that directly meet the unique needs

of marketing while integrating into core financial systems. Examples of these new solutions include Cvent (venue and logistics management) and APR (optimizing the advertising production process). While neither is a “one-stop shop” for marketing procurement needs, both have made huge leaps forward and are helping to create an ongoing dialogue about procurement innovations. The next five years should see the launch of many new business solutions that will allow marketing procurement to come into its own. Keep your eyes out and be ready to seize these opportunities and solutions when they appear. Those are our tips for marketing and strategic sourcing professionals—we hope you found them helpful, thought provoking, or at least a nice break from your day job. We love talking about this stuff (can you tell?) so if you’d like to keep talking, give us a call. JACK TIPS

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Talk to Jack

Contact: Eric Samuelson, VP, Strategic Sourcing, Jack Morton Worldwide Mobile: 617 304 3464 Contact: Liz Bigham, SVP, Director of Brand Marketing E: [email protected] T: +1 212 401 7212 Read our blog at blog.jackmorton.com Follow us on twitter @jackmorton Visit us online at jackmorton.com

About Jack Morton Jack Morton Worldwide is a global brand experience agency with offices on five continents. Our agency culture promotes breakthrough ideas about how experiences connect brands and people – in-person, online, at retail and through the power of digital and word of mouth. We work with both BtoC and BtoB clients to create powerful and effective experiences that engage customers and consumers, launch products, align employees and build strong experience brands. Ranked at the top of our field, we earned over 50 awards for creativity, execution and effectiveness last year. Jack Morton is part of the Interpublic Group of Companies, Inc. (NYSE: IPG). © Jack Morton Worldwide 2013

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