A senior procurement executive at a global advertiser has shared details of the struggles faced by high-level pros to balance financial value with marketing objectives. In an anonymised interview with Digidayjournalist, Seb Joseph, the executive spoke candidly about the tensions between procurement’s efforts to increase value on the one hand and company directives to drill down on cost reduction on the other.
Managers at the company, for example, often couldn’t comprehend that purchasing marketing services wasn’t the same as buying a batch of pens. The executive was often asked to compare the cost of one marketing agency with another and select the least costly – a directive ignoring the need to find out whether the £25m agency fee for a campaign was inflated by hidden costs and kickbacks.
Another difficulty related to successful savings efforts: if the exec managed to achieve a cost reduction on this year’s marketing budget, “next year’s update will be based on what was spent rather than what was allocated.” It makes marketing departments reluctant to achieve cost reductions as they fear losing whatever they haven’t spent in the annual allocation. Asked whether it would make sense to base a procurement marketing exec’s role in the marketing team, the senior pro was clear that it would, mainly to make it easier for both specialisms to work together.
But, as the head of a different team, the executive has seen tensions emerge with marketing colleagues. Some relationships with marketing executives have been a cordial success, but with others, there has been a struggle to get sensitive budget information, crucial for proper spend analytics and sound decision-making, as some marketing execs see procurement chiefs as ‘outsiders.’ The anonymous chief concluded: “I feel like the main marketing teams we have should have a dedicated procurement executive who understands exactly what objectives are trying to be achieved and have the scale to rationalize that with shrewd cost management.”