If marketing is the creative visionary of a big brand, procurement is its practical, strict counterpart. Marketing wants to spend big on the big idea, and procurement wants to save as much as possible. The two often can’t see eye to eye – and marketing budgets suffer.
At the ANA’s Financial Management Conference in Boca Raton, Florida, this week, Coca-Cola and Target described how each redefined internal roles and relationships between marketing and procurement.
“There’s a [cultural] difference between marketing and finance,” said Target EVP and CMO Jeffrey Jones on stage Monday. “The CMO reports into a different boss. Finance thinks CMOs are dumb. That cultural divide is one of the top three issues we have to solve.”
Jones called out his marketing department for not really understanding how their own company makes money – a fundamental problem for a department that commands a huge budget. It’s fueled by what he calls “one of the biggest cop-outs of marketing” – building a brand for the “long term,” with no short-term goals.
“I have to take account of every dollar we spend, and I have to not be afraid to say I’m spending too much,” he said. “When you take that perspective, you allow procurement in.”
On the flip side, Jones thinks procurement should loosen its belt. A spreadsheet calculation isn’t the be-all, end-all factor for brand success. Sometimes, marketing needs money for results that will take time to prove themselves out.
“Marketing needs to do research and development. Our job is to do what works as long as it works, while at the same time figuring out what’s next,” he said. “The only way we can do that is to partner with our finance team to identify budget for the purpose of learning.”
Ultimately, his solution sounds simple: “Marketing needs to learn more about business; finance needs to take risks they can’t always calculate.”
While Target is still working out the kinks of its marketing-procurement relationship, Coca-Cola has put its wheels in motion from the other side of the spectrum.
Christina Ruggiero, chief procurement officer at Coca-Cola, noticed her department was trying to push its own strategy onto other departments, rather than influencing overall business strategy and aligning everyone around the same goals.
“We’re going to the table as shareholders. We’re trying to grow the brands,” she said on stage Tuesday.
To align her team on a company-wide vision, Ruggiero moved the marketing procurement team from the procurement department into marketing.
With new guidance, Coca-Cola’s procurement team manages budgets with a new grasp on marketing that understands scope and value, rather than just cutting costs, and can broaden its definition of value to go beyond savings.
“We taught supply-chain people softer skills like marketing and agency compliance,” she said. “We changed how we look at agencies, how we work together and how we influence business partners and the profit and loss statement.”
The restructure allowed Coca-Cola to reinvest $100,000 back into its brands last year, Ruggiero said.
“We’re thinking of creative ways to reinvest back, not just cutting costs,” she said. “In marketing and advertising, these involve initiatives like investing in fewer productions with the same or more media investments, importing and reusing creative with minor adaptation, bundling production and bringing on single partners to execute multiple jobs.”
When marketing and procurement get along, it’s also easier for the agency to do its job, since it can produce work that’s better aligned to client needs and work within a pay-per-performance model that the brand knows how to measure.
“If you are an agency and you don’t intimately understand what your client does and how they make money, that’s where you have to start,” Jones said.
