Balancing Multiple Spend Categories with Marketing Procurement
In a perfect world, procurement functions would be able to devote the time and attention they need to every spending category. Managers for each category could then conduct in-depth market analyses and discover opportunities for cost reduction and value generation.
Unfortunately, not every procurement team is large enough to dedicate specialized people and resources to every spend category. Many procurement teams are relatively small, so they must balance the needs of their marketing spending with other indirect procurement categories. As a result, marketing procurement may not always get the attention it needs, resulting in wasted spending or mismatched marketing services.
Here are a few ways procurement teams can ensure they get the most from the marketing category, even if they don't have specific resources to dedicate to it.
Collaborate with the Marketing Department
Procurement organizations often collaborate with other departments when selecting products, vendors, and services. Perhaps the most notable example of this is procurement's frequent collaboration with organizational technology leaders. Often, procurement leaders need to confer with IT staff to ensure their contracts, subscriptions, and other agreements with technology vendors meet the needs of the organization.
Ensuring procurement collaborates with other departments can sometimes be a challenge. However, creating a culture of collaboration is a good first step.
According to Supply Chain Management Review, "To create a culture of collaboration, supply chain organizations should identify the types of skills needed and clearly communicate to employees that team-focused and collaborative behaviors are a priority. They must also make collaboration part of everyday tasks and ensure that collaborative behaviors are shown to be important by leadership."
In this sense, procurement teams should collaborate directly with specialists in the marketing department to gain a better understanding of how they should manage the marketing category. Marketing teams are in a unique position to understand the organization's needs regarding specific marketing initiatives, such as advertisements and content. This makes them essential partners in managing the category.
Treat Agency Contracts Like Other Supplier Contracts
Procurement teams often form strong relationships with their suppliers, but at the end of the day, those relationships are only as strong as the value they bring to the organization.
The same is true of companies and their marketing agencies. Internal marketing teams may work alongside agency staff on marketing initiatives for years, forming bonds in the process. But contracts signed with agencies, contractors, and other parties must be scrutinized regularly and as thoroughly as contracts with other types of suppliers.
Businesses evolve, so when an agency contract is set to expire, the procurement department must manage it like it would any other contract. Contract renewals provide opportunities for the organization to address any issues with the previous contract and renegotiate it for more favorable terms. Including marketing contracts into this process can help the organization avoid wasted spending and ensure relationships with marketing providers continue to add value to the business.
Use Data to Make Important Decisions
Analytics can provide the organization with insights into how its spending is contributing to ROI, operational efficiency, and other factors. Most procurement organizations now use some type of solution to track and measure their spending. An end-to-end solution that allows for collaboration and the alignment of strategies among departments is often best suited to this task.
It can sometimes be challenging to generate data and gain insights into how marketing spending contributes to high-level business objectives. However, the marketing department can help the procurement team align its marketing spending with key marketing metrics, such as customer acquisition costs, customer retention rates, and deals closed by channel or lead source.
These metrics can then be compared to marketing spending to reveal trends and, ideally, set strategic goals for the next quarter or year.
The marketing department can help procurement understand whether the company's marketing spending is resulting in improvements. If not, then it may be time for the procurement team to revisit its contracts with agencies, contractors, and other parties.
Don't Miss the Next ProcureCon Marketing Event
Marketing procurement plays an essential role in the overall health of the business. Decisions made by procurement teams regarding spending, contract negotiations, and agency selection can have a direct impact on a company's marketing and sales success. That's why it's so important for procurement teams to give marketing procurement its due diligence and balance it with other procurement priorities.
Through collaboration, robust contract management, and data-powered decision-making, marketing procurement can be managed effectively and deliver substantial value to the business.
Balancing marketing procurement with other spend categories is set to be a hot topic at the next ProcureCon Marketing conference. The event will run from December 6th through December 8th at the Hyatt Regency La Jolla at Aventine in La Jolla, California.
Download the agenda today to learn more.