PROCUREMENT still a thorny issue for Marketers & Agencies [REPORT]

There’s good news and bad news in the world of marketing procurement, according to a new report from the ANA.

The good news is that relations between marketing procurement and marketing departments at major advertisers is showing signs of improvement since the ANA’s last landmark procurement report in 2010.

The bad news is that the relationship between marketing procurement and agencies continues to be fraught with difficulties, not unlike the situation 12 years ago.

The report, Procurement 2022: The Good, the Bad, and the Ugly, also revealed that, overall, marketing procurement is still a young discipline: The average marketing procurement department has existed for only 11.6 years, and 55 percent of marketing procurement departments have been around for less than 10 years. In addition, 24 percent of marketing procurement professionals have less than five years of experience.

THE GOOD

While gaps still remain between the average advertiser’s marketing procurement and marketing departments, there have been significant improvements since 2010.

• Both rate the health of the relationship between marketing procurement and marketing equally: 57 percent of procurement respondents and 59 percent of marketers described the relationship as either extremely or very healthy.
• Marketing’s perception of procurement being a critical member of the team has improved since 2010 and is now equal to the perception of marketing procurement.
• On the key metric of procurement’s definition of value, marketing’s perception has improved and moved closer toward maximum growth and impact and away from lowest cost.
• On the metric of procurement’s view of marketing, marketing’s perception has moved closer to an investment to be optimized and further from an expense to be minimized.

THE BAD

The relationship between marketing procurement and agencies continues to be a work in progress, with considerable gaps between the two.

• Marketing procurement and agencies are far apart on the question of relationship health. Fifty-four percent of procurement respondents characterized the relationship to be extremely or very healthy, while only 15 percent of agencies said the same.
• Procurement perceives that their definition of value is maximum growth and impact, but agencies believe procurement’s definition of value is lowest cost.
• Procurement views marketing as an investment to be optimized. Agencies believe procurement views marketing as an expense to be minimized.
• More than half (55 percent) of procurement respondents agree completely that procurement understands the economic value of successful marketing, versus only 5 percent of agencies.
• Almost half (49 percent) of procurement respondents agree completely that they are “knowledgeable” regarding advertising/marketing, while zero percent of agencies agreed with that assessment.

Going forward, the report recommended that marketing procurement departments must understand their role.

“One of the most fundamental findings of the report is that marketing procurement overall is still an adolescent,” said ANA Group EVP Bill Duggan, the project leader on this report. “At its best, marketing procurement is an enabler and facilitator; at its worst, it can be a roadblock and bottleneck. Marketing procurement must understand what marketing needs and what agencies provide and insert itself with the goal of optimizing the overall value and quality of the output.”

In addition, the study said marketing and procurement are not viewed as a united front by agencies, who believe the two groups’ goals are not aligned. They need to make a concerted and genuine effort to improve their relationship.

Ten specific recommendations are included in the report:

1. Goals Between Marketing and Marketing Procurement Must Be Aligned.
2. Involve Procurement Early in the Process.
3. Procurement Needs to Understand that Advertising Is Unique.
4. Procurement Should Focus More on Value and Less on Cost.
5. Procurement Should Stay Involved Throughout the Process.
6. Procurement Should Work Closer with Marketing Teams.
7. Process Improvements Are an Opportunity.
8. Education Is Critical.
9. Procurement Should Market Its Value.
10. Agencies Should Proactively Establish Relationships with Procurement.

To download report,  CLICK HERE