Post on 12-Jun-2018
STOP ROLLING THE DICE WITH MARKETING AND SALES PROCUREMENT
Brett ColbertChief Procurement Officer
MDC Partners Innovation Center
4
“because it purpose is to create a customer, the
business has two – and only 2 functions:
marketing and innovation
marketing and innovation create value – all the rest are
costs.”
Peter Drucker
Management Guru
6
o advertising accounts for $5.8 trillion in sales – 16% of all sales
activity in the U.S.
o advertising represents 19% ($3.4 trillion) of GDP
o advertising supports 20 million (14%) of jobs in the U.S.
o every $1 spent on advertising generates $19 of economic output
o every $1 million spent annual supports 67 jobs
o media is the world’s largest commodity
Positive Impacts of Marketing
Source: IHA
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But Sadly, Everything isn’t so Positive
The ailing agency-
client relationship is
so bad
that it resembles a
married couple who
“hasn’t had sex
since 1972.”
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marketing - driven by creative excellence, finding deeper insights, storytelling, sales lift and share increase, and trust-based favoritism
procurement - driven by cost reduction & avoidancemaximizing value and ROI, governance & compliance, & risk management
working in a model of engagement that was
designed for a world that no longer exists
…speed, quality and cost doesn’t
work anymore
so why are we measured
primarily by metrics that don’t exist?
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o agencies have faced a 4.5%-per-year annual compound decline in
retainers and fees per client since 1992, minus inflation
o a client that pays their agency $100,000 today would have paid an
equivalent of $450,000 years ago
o scopes of work [SOWs] are drawn up that don’t represent client KPIs,
translating into wasted costs, unsatisfied clients and margin erosion
o avg price for a pitch is $450,000
o it costs 7x more to acquire a new agency vs. retain one
o we’re paying consultants 5x more than agencies, and they’re not really
addressable spend
More Facts
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“more has changed in the
last 5 years than the last 100
in marketing
and more will change in the
next twelve months than the
last 5 years”
Jeff Chamey,
CMO Progressive Insurance
11
o “Marketing needs to learn more about business; finance needs to take risks
they can’t always calculate.”
o Coca-Cola’s procurement team manages budgets with a new grasp on
marketing that understands scope and value, rather than just cutting costs,
and can broaden its definition of value to go beyond savings.
o “We taught supply-chain people softer skills like marketing and agency
compliance,”…“We’re thinking of creative ways to reinvest back, not just
cutting costs”… “We moved the marketing procurement team from the
procurement department into marketing”
Some are Doing Something about it
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o procurement gets more collaborative - spending more time and
engaging sooner with other key stakeholders and external
partners
o goodbye to business as usual - new ways of working are forcing
change on the way procurement operates - and on the way
success is measured
o the technology agenda - procurement today is focused on
automation and collaboration
o the human challenge - as technology advances, attracting and
retaining the right team is one of the biggest opportunities to rise
above the competition
The FUTURE is HERE, is it Indianapolis?
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Marketing Services Marketing Communications Marketing Production Marketing Support
Advertising Agencies Broadcast Media Collateral Material (print) Fullfillment
Media Agencies Print Media Collateral Material (digital) Printing
PR Agencies Digital/Internet Meetings/Conference Displays Promotional items
DM Agencies Direct Marketing Pass through costs CRM
Market Research OOH/Social Media Decoupling Reports/Data Analysis
Meeting/Conferences
Marketing Category Overview
As a general rule, its easier (and less intrusive to marketing operations)
to address the areas in which people services are not being provided
123 4
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Team investments focused on talent, technology
1
Recruiting
new talent
2
Training/
Upskills
programs
3
Supply
chain tech
What are you doing to invest in the future while doing well today?
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1. ENSURE MORE CLARITY
2. GO SIMPLE(R)
3. DON’T ALLOW FOR CONTINUED BAD BEHAVIOUR
4. BE A BETTER PARTNER
5. INCREASE ACCOUNTABILY
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5 Keys to becoming GREAT
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FROM TOP TO BOTTOM
o there needs to be clarity of overall intent, “ownership” of the
category, overall relationship, and shared metrics for success:
- specific goals
- processes
- deliverables
- approvals/decision makers
- legal obligations
“Does everyone have the same definition of value vs. cost?”
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Ensure CLARITY
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o ask questions along the
way, and do what you
say you’re going to do:
- why are we doing this?
- what does it get us?
- is adding complexity,
adding cost?
- are we proud of the work
we did today?
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Go SIMPLE
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o once you understand how the work gets done, you can start to easily
implement improvements in the process – that is value (and
valuable)
o do you know how much internal behaviors cost?
o partners will usually attempt to change their behavior rather than
agreeing to pay more
o are you building a brand for long term, with no short term goals
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Don’t allow BAD BEHAVIOUR
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o “clients get the work they deserve”. How can you do your part to
ensure you are seen as a “good client”?
- establish a collaborative working relationship with the vendor
- understand their business model
- if you have to cut the fee, involve them in the goal setting of how to
accomplish this cut
do you highlight your value that goes beyond the size of the fee
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Make sure you’re a GOOD PARTNER
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o accountability shared?
o are the category strategies shared? and the goals of the
remuneration aligned?
o do you help define the needs of the business and what kind of
engagement is needed?
o can you support the vale of what is being asked in a deliverable?
are you a catalyst to help them get to better work. Faster. No
vendor wants to take a long time to do average work.
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Increase ACCOUNTABILITY
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o Have you looked at Procurement Beyond Savings in the sales and
marketing category?
o What mechanisms have you created that brought change and
improvement from within?
o How should best practices be measured?
Let’s Discuss how GREAT you are
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“in the end, all marketing must be measurable. A key first step is to align
every marketing effort and dollar with its associated business outcomes.
this will go a long way toward being able to connect marketing investments with
business value”