By Shubhra Kakkar & Jane Dormer - Media Marketing Compliance (MMC)
Marketing procurement amalgamates functions of marketing and finance to help brands achieve the sweet spot. Procurement industry specialists engage in a discussion with ETBrandEquity to understand the pros, cons, and how countries are adapting to marketing procurement as an integral function.
It's no secret that there exists an uneasy calm between the finance and marketing functions. And if the vendor’s demands go haywire, one spark could lead to a forest fire.
So what could be the middle way for organisations to attain the sweet spot? Jane Dormer, global client services director, Media Marketing Compliance, describes the one stop solution as marketing procurement. “Marketing procurement is where we help and support the market to reach the right commercial arrangement with any of their suppliers.”
“In other words, it is the best commercial lens on an agreement with a third party,” she adds.
The people involved in this function follow a method called Porter's Five Forces. In the words of Harold Fernandes, founder, Procure Savings, “This involves the process where one needs to know what they're buying, one needs to know the substitutes and alternatives, the market, and what is evolving.”
According to them, the UK is currently ahead of the game than other markets, in adapting to this function. “This is purely because the UK has invested a lot of time and effort into the marketing procurement role over a large number of years,” adds Dormer. About its scope in India, she says, “India is a much immature market that's growing and developing in this. So at the moment the scope might be more on the light touch or on the low hanging fruit.” Shubhra Kakkar, managing director-India and SEA, Media Marketing Compliance adds, “Media spend wise India is much ahead, probably double of Europe. But the number of marketing procurement professionals would be much less than in Europe.”
This gap of more demand for delegating the media spends function and lesser availability of marketing procurement professionals creates a huge scope and to develop this role.
“There are very few procurement experts who bring in a lot of value to the table. Every procurement guy understands the marketing subject to the extent they need to, and half knowledge is more dangerous,” adds Fernandes.
Large global companies like Unilever, Coca-Cola or P&G, already have a person handling the procurement function, not just for marketing, but for media, for creatives, and a dedicated one for activation as well. “They have a global approach to having a global remit. Now that person with the global remit could be based in London, Zurich, US, Mumbai, Delhi, it doesn't matter as long as that person has the capability. Because a global organisation will invest globally in marketing procurement,” shares Dormer.
She adds, “There's a problem with talent and the constant need to have to train and retrain people as they get pulled into other businesses. India might be facing similar problems where the global organisations are training people to a very high standard.”
The challenge is compounded by the fact that the marketing function is very welcoming of a procurement function. There is still a gap in the total understanding of partnership between marketing and procurement.
“The challenge there becomes when marketers are not as good as they could be. Because they don't want to expose their weaknesses to the procurement team,” says Dormer.
This arrangement works best when finance, marketing and procurement are on the same page with the same agenda, and understand what the parameters are. This sometimes can be missing in organisations.
Kakkar adds, “I think marketing people should take it as a plus that they have someone to ask the tough questions and they can take care of the creative part.”
On whether the marketing function and the procurement function should be amalgamated or kept separate, Dormer believes they’re both better off being separate. She adds, “You should have specialist KPIs for procurement and specialist KPIs for marketing, but there should ultimately be one, that is the KPI of the business.”
Fernandes states, “Coupling these two functions creates a kind of confusion in the role. They're supposed to focus on the creativity and the deliverables for the brand and the brand strategy. If they're focused on the operational aspects, they’re bound to be diverted.
In a nutshell, it’s time for marketers to focus on the magic and let someone else take the burden of the math.
Article published 4 August 2022 in: