Marketing Procurement

Back to basics for marketing procurement

Review of Marketing Spend

We believe 2023 will be a year of strong focus on the governance of marketing spend. Many clients, such as P&G and Coca-Cola, have recently confirmed that they are continuing to focus on brand marketing. This leads us to believe that many of the marketing areas will be under increased scrutiny by marketing procurement and the organization.

Back to basics for marketing procurement

During the pandemic, marketing procurement rose to the occasion and was offered a seat at the C-suite table. They delivered critical services within most companies – re-negotiating master service agreements, reducing the scope of work required and even terminated partners in some areas.

While marketing procurement had to step into the “bad cop” role, there was still much empathy with partners, employees and the community as a whole and most companies tried to do the right thing. Where possible, both clients and partners (suppliers, vendors or other) stepped up to the plate to come to reasonable compromises in most cases.

As many of us were vaccinated and the pandemic became less of a threat in mid to late 2022, we all hoped that we could go back to the normalcy of 2019 and prior years. Marketing procurement was happy to be able to go back to the tried and tested strategic sourcing playbook and not only focus on putting out fires within their spend category.

The industry also saw changes in marketing strategies across most companies, with swift focus towards different types of agencies. Agencies who could demonstrate flexibility and nimbleness became very sought after by marketing clients in the US and around the world.

In Q4 of 2022 and so far in 2023, we have been faced with other areas of uncertainty. We have seen one of the ugliest wars in present time erupt in eastern Europe, involving almost all countries of the world in one way or another. We have seen inflation skyrocket before half-stabilizing on a relatively high level.

As consumers, we have all gasped at increased prices for food and other consumption items. We try to spend less time behind the wheel due to higher than usual gas prices and heating costs are out of control in many areas.

At work many of us have also experienced continued supplier shortages and complications in delivering raw materials and other goods to our companies and well as inflation and oil cost pressure on corporations.

So, with all this, what is marketing procurement focused on in 2023?

In many conversations we have had with clients in the last three months, it is “back to basics” that prevail as the 2023 strategy. Many clients are focused on resetting the contracts that were negotiated with much compromise in 2020-2021.

During the pandemic, we all agreed to make sure we all made it through the crisis, but in 2023, clients need to re-establish their competitive advantage by updating the contracts to fit the post-pandemic scope of work requirements, drive better transparency, and ensure collaboration in the new world.

Marketing partners have had some time to reset their own operations to fit the post-pandemic demands from clients and should be able to adjust to the new client demands with flexibility and nimbleness.

Marketing procurement also will focus on careful evaluation of savings opportunities that have been untouched during the pandemic years. When we speak with clients, we are asked about partner consolidation, pitching the business as well as reviewing the current relationships through contractual audits and subsequent negotiations of potential findings and contract updates.

As we heard late last year at Procurecon Marketing in San Diego, CA, 2023 is about “relentless prioritization”. Marketing procurement has a lot of large and small projects to work on to deliver on the KPIs of the organization. Meanwhile, we are seeing many organizations limiting or pausing new hires, thus the team will need to prioritize the big ticket, strategic projects.

This doesn’t mean that smaller, more tactical projects should be ignored. As we all know, delivering savings is a question about executing short term and long-term projects, balancing immediate returns with strategic shifts in key areas such as technology, data and agency partners.

It is about doing the homework of analyzing the marketing spend, including the long tail. What improvements can be done in contractual language, can we consolidate non-strategic partners and increase transparency through quarterly business reviews including financial and operational discussions with both marketing and procurement stakeholders in the room.

Several of our clients have engaged with external partners to drive transparency in areas such as contractual language, spend analysis and setting strategies for the “long tail” marketing partners. The reason for this is that the projects require specific knowledge and expertise which is difficult to acquire quickly.

Also, projects within these areas of focus are usually short at about 3-6 weeks and come at a low-price tag compared to a large, strategic projects that require several months to develop, implement and be tested. They often show a high ROI return to clients as well, due to a low price for projects and significant savings found.

Another area where our clients have chosen to utilize external partners is to identify areas to increase transparency and to negotiate changes to drive this enhanced transparency. Many marketing and marketing procurement teams do not want to be the bad cop when negotiating with the agency about increased transparency. By bringing in external support who has experience on both sides of the agency and client world, it becomes a more equitable conversation.

The final area where marketing procurement is focusing is corporate governance. Again, during the pandemic, collaboration and empathy were the key metrics for how an organization performed in the eyes of employees and consumers.

In 2023, we feel that marketing procurement is focused on re-enforcing the rules of engagement through better corporate governance. This means knowing where the marketing dollars are spent, how they are spent and how transparent the agency partners are.

In addition to all these pure-play marketing procurement priorities, we have seen a huge increase in both DEI (diversity, equity, and inclusion) and ESG (Environmental, social, and corporate governance) efforts that have landed at least partly on the procurement desk.

Because marketing procurement is the lead in introducing partners to the organization by leading RFPs, attending conferences with peers, and managing contractual obligations, it is imperative that marketing procurement quickly gets up to speed on how to drive increased implementation of these important measures.

In summary, we believe 2023 will be a year of strong focus on the governance of marketing spend. Many clients, such as P&G and Coca-Cola have recently confirmed that they are continuing to focus on brand marketing. This leads us to believe that many of the marketing areas will be under increased scrutiny by marketing procurement and the organization. Just like consumers are less confident in their spending, companies will review marketing spend in all categories and try to identify efficiencies and drive effectiveness.