Getting On the Same Page

February 29, 2016

By Tracy Allery, co-chair of 2016 ANA AFM Conference

It’s time to evolve how we measure marketing procurement. 

I’ve worked for several different types of companies. Some have been sales-led, others brand-led, and even finance-led for annual planning purposes. None was procurement-led. We are a support function and our opportunity to lead comes from servant leadership. We can take pride in delivering excellent client service along with business results. As a support function, marketing procurement’s objectives need to align to our client’s objectives. Sometimes, however, procurement departments set their own goals that can be at odds with business priorities for growth. I know a CFO who put it best: “Cost reduction initiatives are a distraction from our true priorities.” 

One example of goal alignment would be agency bonus calculations. When we establish performance-based compensation for agencies, we align the goals of the agency to the goals of the brand teams they support. The same metrics are used for both teams. The approach ensures that everyone is rowing in the same direction. This is generally accepted as best practice to align the internal and external goals. That alignment is just as important with internal support functions. 

When goals are properly aligned, it opens the door to getting more out of the function. At the center of marketing procurement work is understanding the nature of the service needed and seeing the most efficient path to getting it, within the parameters of timelines, quality, contracts, risk tolerance, intellectual property requirements, payments, internal workflows, and the like. 

All of this work is necessary to conduct the daily business of growing brands, no matter where the responsibility sits within the organization. Without a dedicated Marketing Procurement function, the tasks must be distributed to others, such as brand managers, administrative staff, or marketing services teams.  A benefit of this approach is keeping the work close to those who need it; the day-to-day tasks and projects can work well here. I’ve worked in organizations that assign these responsibilities to brand teams with the intent of building business acumen or an understanding of contracts. I’ve also worked for companies that want Marketing to focus on growing the top line. It’s a strategic decision for the business.

A focused Marketing Procurement team is better suited to developing a strategic view of services and spending. We call this Category Management. It’s a detailed review of the spend, including cost drivers, internal and external trends, financial performance of key suppliers or agencies and a review of their business goals, and a relationship management strategy. A good category strategy would be developed with stakeholder’s goals in mind. For example, if Marketing seeks to find new creative agencies for upcoming innovation launches, the category strategy would lay out a plan to identify, evaluate, and select those agencies. If brands need to manage production costs, the strategy might be to identify low cost options.

This takes us back to the principle of alignment. Just as goals need to be aligned between agencies and clients, goals need to be aligned between Marketing Procurement and its clients. Spending smartly is everyone’s goal, but cost savings cannot be the sole measure of that objective.

Tracy Allery has worked in Marketing Procurement for almost 18 years in financial services and CPG. She's a co-chair of the 2016 ANA Advertising Financial Management Conference, May 1–4, in Boca Raton, Fla. This post represents her personal views and not the position of The Hershey Company.

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