The End Of Marketing Procurement: SRM
Repeat after me...
Supplier Relationship Management is the new Rock n' roll / Black / Superfood / Normal (delete as appropriate).
Below are the SEVEN REASONS why this is true.
Hands up anyone who has spoken, written or even thought ill towards procurement at some point in the last few years. All of you eh? Not that surprising.
As some of you may know (because we have written about this rather extensively now) there are two types of marketing procurement; those that view marketing budgets as a cost to be managed downwards and those that view marketing budgets as an investment for growth. We have always been strong advocates and championed the latter type and we still get excited by hearing names of marketing procurement professionals who are really operating like this. They really are transforming marketing into the business discipline it should be; making it accountable, productive, corporate and investment-based.
I even admit that despite being a frequent champion of marketing procurement and fully embrace the diligence and transparency that many procurement leaders can bring to the murky world of media buying for example, I've had some dark moments with procurement.
These are triggered in large part by bad practice, such as a recent surprise (!) Dutch auction foisted on us at the end of a long process to procure our (value based) consulting services. This was galling having been told that the contract would not be decided solely on the lowest price. Sigh. Guess we've all been there.
So it is no little wonder, with many of these kinds of experiences that suppliers have with marketing procurement that they seem to have gotten themselves a rather poor brand notoriety. Misunderstood and under valued by many, marketing procurement's typical participation in marketing decisions seems to be by some level of default rather than need or desire by marketing and agency leaders to empty a sack of grit into their previously well oiled relationships.
Procurement (in marketing terms) perhaps needed some form of redemption, or brand re-invention.
Step forward SRM.
Supplier Relationship Management. Sounds good, doesn't it. Thediscipline itself is nothing drastically new but we are starting to see marketing procurement people pop up with this snazzy new job title and we are inclined to rise to our feet and applaud. It is new to media procurement and that is exciting. Why so?
1. Most media value distribution is discretionary on the part of your media agency, they are the arbiters of how much media value gets given out to which clients. Including you.
2. It is our experience (from 15+ years in media agencies) that the agency's "priority" clients get given the most value - this includes not just the added value and discounts on media trading but critically important soft elements such as great talent and innovation. Its a fact that "priority" clients get more that their fair share of all these things.
3. The relationship you have with your media agency (and how you maintain it) is therefore a HUGE determinant of how much value you get from your media budgets. This is not measured in small incremental percentage gains, it could double or triple the effectiveness of your media budgets. Seriously.
4. Companies that are investing in having Supplier Relationship Management experts manage their media agency relationships understand the significant benefits that this can bring to improve productivity and value.
5. We encourage CMOs, CPOs and CFOs around the world to consider focusing more skilled relationship management resource on their marketing service suppliers, rather than the just sending in the cost cutters.
6. However, it is important to note that this should be part of a balanced team with responsibility for media governance; including marketing, media, procurement and finance. Costs have to be managed diligently and client needs to be reassured they have a competitive cost position established with the agency. I can only assume (with hope) that P&G's Chief Productivity Officer would perhaps have some remit over this kind of SRM practice, ensuring maximum value is being derived from media spend.
7. At ID Comms we advise that defining, building and then frequently evaluating the quality of the client/agency relationship is now as important as defining and auditing your media trading deals. The quality and productivity of a relationship is that significant. It needs processes and resource dedicated to it. It is the only way to make every dollar work hard and it is the cornerstone of robust media governance.
SRM: The New Marketing Procurement.