CMOs Should Work Closely with Procurement

A full 74 percent of marketers aren’t taking advantage of a powerful asset hidden right under their nose, according to CMO Council’s latest research.

Very few marketers feel that they have any kind of relationship with procurement, which the association says is a massive missed opportunity. Between teams feeling like they don’t understand each other and organizational silos preventing effective collaboration, it’s no surprise that overlooked inefficiencies are weighing down organizations across all industries, the council says in the report.

Given today’s marketing pressures, such as tighter budgets, leaner staff, the movement to digital channels, and increased expectations for higher and more tangible returns on marketing investments, smart sourcing has become paramount to successful modern marketing, the association says.

The report urges CMOs to enlist procurement to help them make better decisions, noting that CMOs who more actively involve procurement in marketing sourcing make better decisions.

Other findings presented in the report include the following:

• Only 26 percent of marketing leaders actively partner with procurement in the identification, selection, and negotiation of marketing vendors. This represents a sizable opportunity for marketers to leverage procurement services.
• Seventy-one percent of marketing leaders who limit or avoid procurement involvement say procurement doesn’t understand marketing, particularly with creative agencies and services. This identifies a need for procurement professionals to learn how to better evaluate marketing vendors.
• Seventy-eight percent of marketing leaders in very effective working relationships with procurement tend to also involve digital/e-commerce functional groups in marketing sourcing decisions.

Marketing should aim to leverage procurement’s expertise to evaluate and select the right agencies/vendors that can provide value and align media buying and other activities to the larger business strategy.

“Think of procurement as a strategic partnership that spans planning, vendor analysis, selection, and management, rather than a box marketers need to check in contract negotiations,” says Donovan Neale-May, executive director of the CMO Council. “A rudimentary level of involvement will likely not generate any significant value for marketing.”

CMOs should involve procurement in the following ways:

• To develop a global and local marketing sourcing strategy and establish sourcing processes.
• To create a framework for identification and selection criteria, performance metrics, etc.
• To optimize marketing technology planning, vendor evaluations, and contracting for better integration and alignment with the overall digital transformation strategy.
• To review the existing agency landscape and contracts and to consolidate rates and spending.

“Considering the uncertainties in the current socioeconomic environment, marketers are facing increased pressures to elevate performance and meet short- and long-term goals while facing added pressure on budgets and spending,” says Jason Galloway, customer advisory leader and marketing consulting practice lead at KPMG. “Marketers can generate more value through a closer, more strategic partnership with procurement, leading to more robust marketing sourcing, management capabilities, and measures to assess performance.”