The relationship between procurement and marketing has always been dicey, but things may be turning a corner.
New survey results previewed Wednesday at Association of National Advertisers (ANA) Advertising Financial Management Conference show that while procurement and marketing professionals may not always see eye to eye, both parties are starting to collaborate better to achieve more mature buying practices within the marketing department.
Conducted by the ANA among 155 client-side marketing and procurement professionals, the survey found that 62% of marketing procurement professionals and 30% of marketers reported that the relationship between the two groups have improved over the past year.
“The findings indicate that the marketing/procurement relationship, which historically has been much maligned, may have finally turned the corner and is now on a positive path, ” said Bill Duggan, group executive vice president at the ANA.
He added that the past decade and a half of procurement commonly working with marketing has given these professionals time to learn the nuances of the marketing world and to build better relationships with marketers. “The smarter ones immersed themselves in the industry,” he said, “and also learned, very importantly, that you have to do marketing procurement with a different mindset than raw materials procurement.”
The survey found that one of the most important factors driving better relations between the two departments was senior management support, along with better communication between procurers and marketers. Also key is that procurement has had a time to prove its contribution to the marketing department.
“It’s one thing to like the guy you’re working (with) or that he or she knows marketing and is a good negotiator, but it’s another thing entirely when they have proven themselves and their value,” Duggan said. “That’s the anchor in the relationship and that has got to happen.”
Experts in the procurement space say that in order to get those proven results, marketers should involve procurement staff when developing agency relationships.
“Let them help you structure and formalize the agency relationship in areas such as KPIs, performance reviews, pricing and getting a robust contract in place,” wrote David Little, a marketing procurement consultant for Trinity P3. “Getting peace of mind knowing your agencies’ rates and hours are reasonable in relation to market benchmarks is also essential to a trust-based and transparent agency relationship. Procurement can research and benchmark the financial audits.”
Additionally, Duggan said marketers should be thinking more strategically in how they invite procurement to collaborate. Marketers see procurement’s biggest value in negotiating RFPs and RFIs, but Duggan said that creates a role for procurement that’s too tactical.
As a result, there’s still a big disconnect between how procurement and marketing measures the success of their collaboration. Procurement professionals considered the three most important metrics to be cost reduction, risk mitigation and cost avoidance, while marketers saw sales and market share increases, marketing ROI and brand health metrics as the best yardsticks for effective purchasing.
“To me that is the next step in the procurement marketing relationship, to have some greater overlap on the respective goals,” Duggan said.
While cost will always be important for procurement, when marketers have a long-term relationship with an agency there’s only so long a company can hammer that agency on costs, Duggan explained. Besides, the CEO is much more likely to ask how much an agency cost the company than what kinds of sales that relationship drove.
“Savvy marketers need to challenge procurement to be more strategic and tell them it’s important to make an impact on those top-line metrics like sales and market-share increases,” he explained.
