Marketing Procurement Must Embrace its Role in Improving Marketing ROIJune 28, 2013
By Bill Duggan, Group EVP, ANA
ANA recently embarked on qualitative and quantitative work to better understand the metrics used to measure the success/contribution of the marketing procurement organization. We looked at (a) the metrics used to measure the marketing procurement organization and (b) the importance placed on each respective metric.
It’s no surprise that the top ranked metrics used to measure the success/contribution of marketing procurement are cost reduction and cost avoidance. When asked, “Ideally, what should be the metrics used at your company to measure the success/contribution of the marketing procurement organization?,” the top ranked metrics were agency/supplier performance improvements, process improvements, cost reduction, and cost avoidance.
Respondents were also asked to rate the importance their company currently places on the various metrics. Cost reduction, far and away, is the most important metric currently used to measure the success of marketing procurement. Internal stakeholder (marketing) satisfaction, cost avoidance, and risk mitigation rank next in importance.
Now here’s where it really gets interesting. Respondents were then asked, “Ideally, what should be the importance placed on each of these metrics?” Top ranked -- improve marketing ROI!
A key concept some organizations still struggle with is understanding marketing spend as an investment rather than a cost. Marketing is an investment to be maximized and not an expense to be minimized. In that context, the role of marketing procurement is to help maximize the investment in marketing activities. It is also critical that procurement approach its marketing and agency relationships with this perspective.
The role of marketing procurement cannot be short-sighted, focused exclusively on relentless cost reduction and the lowest-cost options. Instead, marketing procurement should work to ensure every dollar is invested to deliver maximum growth and profitability. Improve marketing ROI is a metric to be embraced by procurement.
The new ANA white paper, “Elevating the Role of Marketing Procurement,” is available at www.ana.net/elevatingprocurement.
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