Marketing Procurement

Latest research shows CMOs benefit greatly from better working relationships with procurement

Download the report here

Co-developed with KPMG, this report covers critical aspects of the marketing to procurement relationship, how they collaborate, what hurdles need to be overcome, and what capabilities and outcomes they effectuate, such as agility, cost and innovation.

The findings are based on a survey of over 200 marketing leaders across B2B and B2C industries. Additionally, in-depth interviews were conducted with executives at brands like E&J Gallo Winery, Commvault, Audacy and more. 

The report reveals that not long ago, a marketing leader at a global energy company decided to reach out to procurement for help. Generally speaking, it’s an unusual request, since many marketers try to avoid procurement, dare we say, like the plague. 

But given today’s marketing pressures, such as tighter budgets, leaner staff, higher stakes with marketing technology (MarTech), and expectations of increased and tangible return on marketing investments (ROMI), smart marketing sourcing has become a team sport.

The uncertainties emerging from the pandemic are accelerating these pressures. The good news: there are significant opportunities for procurement to help advance marketing sourcing. 

However, prior attempts at marketing and procurement working together have often been challenging, as differing mindsets, goals, success criteria and processes have traditionally gotten in the way. There are now more significant reasons why CMOs and CPOs could potentially have an effective partnership: 

Doing more with less

Marketers are expected to generate more value out of less budget, fewer FTEs, etc., and deliver concrete results in the short term as well, while not losing sight of long-term goals.

Need for agility, cost and innovation 

The impact of successful marketing sourcing and vendor management can directly influence effort, agility, cost control, media transparency/measurement and ability to innovate. 

Consumerisation of B2B 

Many B2B companies are pivoting to meet the needs of changing consumer expectations by innovating their business model for superior customer experience. This requires a complex marketing ecosystem with effective global vendor management processes yet aligned to local requirements.

Companies where marketing actively involves procurement have more robust marketing sourcing and management capabilities and measures to assess performance. Consequently, quality of sourcing and its impact are potentially higher. 

78% and 62% of marketing leaders in “very effective” and “effective” working relationships with procurement tend to involve digital/e-commerce functional groups in marketing sourcing decisions, respectively. This points to a greater maturity in digital. 

Top three marketing sourcing areas that involve procurement are: 

• MarTech 
• Marketing Event Services 
• Media Agency Selection 

However, only 26% of marketing leaders actively partner with procurement in the identification, selection and negotiation of marketing vendors. This represents a sizable opportunity for the vast majority of marketing leaders to tap into procurement services, have a robust marketing sourcing process and make smarter marketing sourcing decisions. Among marketers who limit or avoid procurement involvement, 71% say procurement doesn’t understand marketing. 

Marketers should help procurement professionals learn how to better evaluate marketing vendors, especially creative agencies, and collaborate to create a framework for identification and selection criteria, performance metrics, etc.

The bottom line, the survey suggests, is to think of procurement as a strategic partnership that spans planning, vendor analysis, selection and management, rather than a box marketers need to check in contract negotiations. 

A rudimentary level of involvement will likely not generate any significant value for marketing. There is significant value to be gained by moving towards a model where procurement has a more active role in marketing sourcing. There is value in furthering the effectiveness of the working relationship with procurement.

Amy Lund, Vice President of Creative and Communications at E&J Gallo Winery states: “We needed to modernise our marketing organisation three years ago, and agency procurement and management was one of our pillars. The quality of work and the ideas we’re getting now are much more superior than what we were getting before”. 

Missed opportunities

The study found that three out of four marketing leaders don’t actively partner with procurement in the identification, selection and negotiation of marketing vendors. Too often, procurement is relegated to an administrative role and only called upon to sign off or redline a new contract. At many large companies, procurement manages only big projects — $250,000 or more. 

Marketing sourcing frequently falls below this threshold. It’s also a reason why marketers at smaller companies are less likely to work closely with procurement. The onus falls on marketers to reach out and bring procurement into the fold.

This requires marketers to recognize marketing-sourcing capability gaps and to have a desire to fill them through procurement.

The report found that three out of four marketing leaders don’t actively partner with procurement in the identification, selection and negotiation of marketing vendors. Too often, procurement is relegated to an administrative role and only called upon to sign off or redline a new contract. 

At many large companies, procurement manages only big projects — $250,000 or more. Marketing sourcing frequently falls below this threshold. It’s also a reason why marketers at smaller companies are less likely to work closely with procurement. The onus falls on marketers to reach out and bring procurement into the fold.

This requires marketers to recognize marketing-sourcing capability gaps and to have a desire to fill them through procurement.

The report also explains that more than ever, CMOs are under pressure to do more with less. Marketing needs procurement to make better sourcing decisions. The findings reveal that CMOs who more actively involve procurement in marketing sourcing enjoy a more positive impact on the overall maturity and quality of marketing sourcing decisions.

However, the CMO-CPO relationship has been challenging. Differing mindsets, goals, success criteria and processes have traditionally gotten in the way. Can the CMO-CPO relationship be improved? To answer this critical question, leading authorities from KPMG asked Jason Galloway and Patrice Gilles on CMOs and CPOs, to give their perspectives. 

Also questioned in the report is, what is driving CMOs to seek procurement’s help in sourcing? And ultimately, why now? 

Jason Galloway, Principal KPMG US Customer Advisory Leader and KPMG US Marketing Consulting Lead, states that “Marketers face added pressures on marketing opex and capex, as well as pressure to get tangible return on marketing investments. This requires marketing to look at sourcing differently. 

They must derive more value and impact from partners while creating tighter alignment to strategy across the enterprise. To consistently drive tangible business value, marketers need to have faster time to market and be more responsive to market changes. This calls for effective MarTech implementation and better agency and vendor partner management”.

When asked about some of the myths CMOs have about procurement and vice versa, Galloway adds “CMOs largely believe involving procurement slows down the marketing sourcing process and thus time to market. On the contrary our study indicates, if CMOs involve procurement more actively at a strategic level, they will witness a faster and a more robust marketing sourcing process”. 

He continues, “Procurement on the other side believes marketing seldom assesses impact and performance in a manner that is comprehensive, more tangible and material to business impact”.

What does each need to do to have better working relationships?

In response to this question, Advisory Managing Director of Procurement & Outsourcing Advisory Patrice Gilles, explains that there are several key factors critical for CPOs to work successfully with marketing stakeholders. 

“The first”, she states, “is recognizing that marketing is indeed a special category that requires a specific skillset and demeanour in their procurement resources. Ensuring that the right talent is in place and has a deep understanding of the marketing ecosystem and the different value levers is a critical need”. 

She adds, “We have seen some of our clients have success by bringing resources from their marketing organisation into procurement and teaching them the procurement skills necessary to be successful. The second key factor is recognizing that lowest price is not the measure of success in marketing. 

New ways of measuring value must be deployed to ensure that marketers continue to receive great creative at a fair price that is equitable to everyone. Finally, procurement organisations must build trust by proving to their marketing stakeholders that they can execute projects that capture value without upsetting the delicate relationships between marketing and their agencies”. 

How areas of conflict between marketing and procurement can be overcome

Galloway expresses that while there is no one-size-fits-all solution here, marketing and procurement need to establish governance structures and processes that allow teams to maximise inherent synergies. 

“A great place to start is cross-training workshops to bridge capability and skills gaps mutually”, he states. “The key is to involve procurement right from the beginning to capture efficiencies in the upstream activities of marketing supply chain”. 

Meanwhile Gilles explains that “Communication is the most critical component to building a solid working relationship. Many successful companies create a marketing management ecosystem complete with regular check-ins between procurement, finance, and marketing to ensure that communication happens in near real time”. 

She adds, “Senior leadership buy-in is also a key component for both groups. CPOs and CMOs must set the tone of cooperation and be clear in expectations that their teams work closely and toward common goals”. 

Key actions highlighted in the report: 

A missed opportunity

Consult and involve procurement to develop your global and local marketing sourcing strategy and establish processes for sourcing management. 

Involve procurement to review your existing agency landscape and contracts, and to consolidate rates and spend. Get leaner and more effective. 

The “creativity” blind spot

Design training/workshops to help procurement professionals appreciate creative nuances and demands of marketing and branding. 

Involve procurement early in the process of marketing supply chain design. 

Smart sourcing – MarTech and agency

Involve procurement across MarTech planning, vendor evaluation and contracting for better integration and alignment with the overall digital transformation strategy. 

Similarly, involve procurement for agency selection, contracting and lifecycle management for better transparency and enhanced agency performance. 

Managing performance

Involve procurement in the development of the performance assessment process to be able to arrive at the right mix of metrics. 

Involve procurement in the agency delivery assurance process to identify and SLA or performance deviations. 

Relationship dynamics – participation 

Set up a governance forum involving marketers and procurement professionals to evolve ways of working (e.g. collaboration rituals), reduce friction and enable continuous engagement across sourcing cycles. 

B2B lags behind B2C

Leverage procurement’s expertise and skills in defining your global and local marketing sourcing strategy and requirements to ensure a lean and agile vendor ecosystem aligns to global requirements with regional or local specificity.