September 8, 2005
In a 2005 ANA survey of executives from both Marketing and Procurement, results showed that while there is slight common ground, there is still a predominant disconnect between these two groups. ANA committee members from both sides of the equation discussed these points and how to bridge the gap.
The disparity is significant. Marketers and procurement professionals are not aligned about current or future roles. Marketing appears resistant to Procurement's involvement in the marketing process. Marketing and Procurement disagree on Procurement's effectiveness. Those in Procurement see themselves as specialists whereas those in simply Marketing see themselves as generalists. The biggest issue is that there are perceptual differences of what each side's goals/priorities are (Marketing looks to make a mark; Procurement only cares about the bottom line/ROI).
On a more positive note, both sides agree there is room for improvement in their relationship, and there are bridges to be built.
Bridging the Gap: Successful Steps to Relationship Building:
Steps for both sides:
- Co-location. This is a long term collaborative effort so work closely and, if possible, relocate to closer surroundings (only four of the 30 members in the room currently share space with their counterparts);
- Establish scope of work immediately. Clear roles and responsibilities from the start;
- Have a cross functional steering committee (President's office, Marketing, Procurement, Agency, etc.);
- It should be clear that both constituencies want the same thing: great creative.
- Develop shared objectives. One member stated, "To shift the paradigm, you have to adjust the relationship. If you do the qualitative stuff, the quantitative will come";
- Train between disciplines. Marketer learns about procurement. Procurement learns about marketing;
- It is critical for marketers and procurement to be on the same page when dealing with vendors. Pick your battles. One member shared: "If Procurement goes against the Marketing Department and the agency, they'll lose. Don't put yourself in that spot"; and
- Give it time. Don't expect relations to be great overnight.
Steps for Procurement:
- Emphasize that procurement is helping marketing get the best value from the agency, rather than trying to merely help the company cut back on marketing funds.
- Make it about adding value, not about saving money. If anything, it is about leveraging the dollars, on a global scale if possible, for reinvestment back into marketing;
- Develop an expertise in the department you support (in this case, marketing). Don't move procurement people to a new category every few years. One member who has experience success in this relationship stated, "Consistency is key!"
- Be sure to get senior-level sponsorship from marketing managers (or beyond-the C-suite folks).
- Understand what marketing values in creative. This is key.
- Emphasize to marketing that measurement/transparency will only make the process better the next time around.
- Empower marketing so they can negotiate with their agencies and keep ownership of that relationship. One CPG marketer shared a successful model where they have benchmarked 80% of agency fees. This provides marketing a guideline for what they should be spending. Setting benchmarks defines what a project should cost which allows marketers the flexibility to manage individually.
- The answer to "You're not getting involved in my creative are you?" = Be at events and shoots with an inquisitive eye. Show your commitment to your marketing colleagues. Your role is in working with agency and brand teams on transparency so cause and effect is real clear.
Steps for Marketing:
- Educate Procurement on:
- The jargon and industry terms of art;
- The technical aspects of marketing;
- Current technology issues (like RFID);
- Consider talking to clients together to provide consistency (statistics show that marketing roles change every eighteen months) over time.
- Involve procurement in upfront planning meetings.
- Look at how to best leverage procurement's role so as to improve work-life balance for the marketing team and help put the focus back on strategy, creative and the brand. For example, procurement can focus energy/time on finding the best agency so the marketing team can focus on getting the best creative.
What Procurement wants to know about Marketing:
- Marketing jargon and technical aspects;
- What marketing values (their creative eye) so they can contribute in an aligned fashion;
- Their goals, objectives and expected deliverables so as to understand the value both departments can drive together.
- The Marketing Champion: How have they furthered procurement relationship?
- Involved early on, typically when discussing annual budgets and forecasting. Truly understands why procurement is there.
- In most cases the only way large projects, especially global in scale, get effectively developed is to have senior executive involvement;
- A relationship builder: Shares personal goals and objectives with both marketing and procurement
- One marketer, a pharma company, builds relationships with junior marketers and educates them on rates, strategy, etc.
- Some companies hire procurement professionals from marketing constituencies to breakdown barriers. Some members acknowledged that there is built in respect from marketers if their procurement counterpart has a marketing background. One member thought it key to, "have expertise in what you are managing".
Further discussion focused on next steps. Many marketers feel it is critical to get the agency involved with the education process. The AAAAs has a training course for how agencies can better deal with procurement. We need to understand what is involved and how procurement can enlist agency assistance in getting marketers to understand their role better. The agencies, in may cases, have considerable influencing power over marketing. Members would like ANA to consider including the agency perspective into the next survey on the topic.
Further evaluation needs to be done on a category by category basis to examine more granular data about the perceptual disconnect.
"Marketing/Procurement Disconnect." ANA Marketing Financial Management and Procurment, West Coast Committee; ANA Advertising Financial Management Committee, 09/08/05.