Marketing Procurement

Saving money without reducing your impact

Communication is key

“It’s tempting to cut back on training during periods of cost cutting but that will just compound the issues but instilling best practice pays benefits now as well as the long-term”

Marketing budgets have never been under more pressure but cutting spend is rarely the right option. However, there are other ways in which marketers can manage their budgets wisely and find additional efficiencies without impacting output.

Based on our work with hundreds of clients around the world, we think there are seven areas where most marketing organisations should be able to identify savings:

Agency fee benchmarking and resource optimisation

Most brands do this as part of a pitch or as part of an incumbent agency review, but if you haven’t done one recently, it could be a good way to identify inefficiencies and any abnormalities in rates/staffing. Knowing you have the right team in your external agency partners at a competitive price is a good start. This will give you the ammunition you need to justify the cost of bringing in this vital expertise.

Roster rationalisation

Do you really need everyone in your roster? It’s a natural fact of life that agency rosters can become bloated over time, resulting in wastage, duplication and heavy resource requirements. Not to mention all that additional management. Rationalising the roster and providing a framework for marketers to reduce reliance on multiple agencies overcomes inefficiencies. Our experience with international clients has found agency savings of between 10-20%, production fee savings of 5-20% and up to 42% reduction in time spent managing agencies once this process has been completed.

Fixing rather than pitching

Changing agencies can be a costly distraction. Add to that the loss of institutional knowledge and the time it takes for the new agency to understand your business and you can see why fixing the issues with an existing agency might be a better, more affordable option. Investing in performance management for your agencies will both save money and boost effectiveness in the long term. Samsung is a great example of a brand doing this really well.

Avoiding the hidden costs of pitching

Although we think that fix is better than pitch, there are times when it is necessary. However, marketers should be wary of the hidden costs of pitching. If agencies have to pay intermediaries ‘win fees’ or subscriptions, these will inevitably be ‘clawed’ from your budget over time. Those who won’t pay them may not be included in your pitch at all. If you decide to use an intermediary – and we would recommend that you do – be very clear about their business model.

Agency contract compliance

Our research for both the WFA and ISBA has found that nearly half of clients have concerns about transparency of cost from their agencies. Contract compliance should be a systematic process as part of any relationship and not simply one that’s conducted at specific milestones such as the end of a major campaign or shoot. Performing one will provide cost transparency and unearth hidden inefficiencies, especially from any ‘out-going’ agencies.

Better briefing and frictionless ways of working.

The quickest way to make your marketing organisation less-efficient is to brief badly. Poor briefing and inefficient communications is consistently one of the main areas of inefficiency we see. It’s tempting to cut back on training during periods of cost cutting but that will just compound the issues but instilling best practice pays benefits now as well as the long-term. Briefing is a core and fundamental skill and marketers should first be trained and then reminded what ‘great looks like’.

Reduced asset creation/wastage in the consumer journey

Review the communications development process to focus on need and quality rather than quantity will help ensure you get maximum value from every piece of content. This includes being clear what can be created globally or regionally and what needs to be nuanced locally. Not only does this have cost benefits but it also helps to support the sustainability agenda by avoiding waste, add in techniques such as virtual production and the opportunity for reducing cost is clear.

Slash and burn might seem like the right approach when times are tough but the end result is likely to be lots of smoke that makes it harder to see the wood for the trees. The best approach is to deliver a raft of savings that will reassure the finance department that not only are you getting the best value but also that your team is working as effectively and efficiently as possible.

About the author 

Christine Downton is Associate Partner at The Observatory International