Procurement deals with different teams and as such, would be quite aware of the intrinsic nature and working style of each department. While some departments may be easy to work with, some may not be quite so. And procurement needs to have the wisdom to handle each department according to their needs and contribution to the overall business. So let’s take a look at some of the paradigm shifts when it comes to procuring for the marketing folks.
We have all heard of terms like cost center and profit center and we know that marketing is categorized in the former. When it comes to the return on investment for that cost, marketing activities can often have an indefinite time frame; this means that the returns from a certain activity may keep trickling in for a long time, with the possibility of some big surprise always remaining alive. As such, by its nature, marketing is not an activity that brings immediate tangible business results. But it certainly isn’t immeasurable! So it is important to work out the performance metrics and measurement plan before setting out on critical marketing spends so that the stakeholder and the procurement function are both aware of where they are going with a given expense over time.
Marketing often comes under the pressure of spending all that was given to it, the reason being that not exhausting the current budget might lead to budget reduction in the next budget. This means marketing isn’t incentivized but instead turned against cost cutting measures even if they are conscious of, say, a potential negotiation opportunity. What’s needed instead, is a feeling of security and full ownership of the budget allocated and an added incentive of being able to choose how to spend the savings on other important activities.
Most agencies work on the principle of relationship building where they can go to an unsustainable extent in cutting costs just to win the client’s account. So that might seem like the green grass for procurement folks. But the downside of the same is that such unfair cost cutting also lowers the motive and inner drive for the agency creative and project personnel to deliver their best. So basically it is a lose-lose situation in the long term and should be avoided.
(A few more tips will be covered in Part II. Watch out for my next blog!)