It’s no secret that there is an uneasy calm between the finance and marketing functions. And if the seller’s demands go wrong, a single spark could start a forest fire.
So what might be the middle road for organizations to reach the sweet spot?
Jane Dormer, global director of client services, Media Marketing Compliance, describes the one solution as marketing procurement. “Marketing Sourcing is where we help and support the market to strike the right business deal with any of their vendors.”
“In other words, it’s the best business goal on a third-party deal,” she adds.
People involved in this function follow a method called Porter’s Five Forces. In the words of Harold Fernandes, founder of Procure Savings, “It involves the process where you have to know what they are buying, you have to know the substitutes and the alternatives, the market and what is changing.”
According to them, the UK is currently ahead of other markets in adapting to this function. “It’s only because the UK has invested a lot of time and effort in the marketing supply role for a lot of years,” Dormer adds.
About her reach in India, she says, “India is a very immature market that is growing and developing in this area. So at the moment the scope could be more on the light touch or on the fruits at hand.
Shubhra Kakkar, Managing Director-India and SEA, Media Marketing Compliance adds, “India in media spend is way ahead, probably double Europe. But the number of marketing purchasing professionals would be much lower than in Europe.
This gap of increased demand for delegating the media spend function and less availability of marketing procurement professionals creates tremendous reach and allows for the development of this role.
“There are very few procurement experts who bring a lot of value to the table. Every purchasing manager understands the subject of marketing to the extent they need it, and half the knowledge is more dangerous,” adds Fernandes.
Large global companies like Unilever, Coca-Cola or P&G already have a person in charge of the procurement function, not only for marketing, but also for media, for creatives and a person dedicated to activation as well.
“They have a global approach to having a global mission. Now that person with the global mission could be based in London, Zurich, USA, Mumbai, Delhi, it doesn’t matter as long as that person has the ability. Because a global organization will invest globally in marketing buys,” Dormer shares.
She adds: “There is a problem with talent and the constant need to train and retrain people as they are drawn into other companies. India might face similar issues where global organizations are training people to a very high standard.
The challenge is compounded by the fact that the marketing function is very supportive of a purchasing function. There is still a gap in the full understanding of the partnership between marketing and purchasing.
“The challenge there becomes when the marketers aren’t 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 purchasing are on the same page with the same agenda and understand what the parameters are. This can sometimes be lacking in organizations.
Kakkar adds, “I think marketers should consider it a plus that they have someone to ask the tough questions and can handle the creative part.”
As to whether the marketing function and the procurement function should be merged or separated, Dormer thinks it’s best that they both be separated. She adds, “You should have specialized KPIs for purchasing and specialized KPIs for marketing, but ultimately there should be one, that’s the business KPI.”
Fernandes says: “The coupling of these two functions creates a kind of confusion in the role. They are supposed to focus on creativity and deliverables for branding and branding. If they focus on the operational aspects, they are bound to be diverted.
In a nutshell, it’s time for marketers to focus on the magic and let someone else do the math.