A new CMO Council report reveals that smart sourcing has become paramount to successful modern marketing given today’s marketing pressures, such as tighter budgets, leaner staff, growth of digital marketing and MarTech, and higher expectations of increased and tangible return on marketing investments.
The new study, Smart Spending at Speed. Is This Real?, produced in partnership with KPMG LLP, covers critical capabilities of marketing sourcing and how CMOs can enlist procurement to help marketing make better decisions. The report found that CMOs who more actively involve procurement in marketing sourcing enjoy a more positive impact on the overall maturity and quality of marketing sourcing decisions.
Key findings include:
- Only 26 percent of marketing leaders actively partner with procurement in the identification, selection and negotiation of marketing vendors. This represents a sizable opportunity for marketers to leverage procurement services.
- 71 percent of marketing leaders who limit or avoid procurement involvement say procurement doesn’t understand marketing, particularly with creative agencies and services. This identifies a need for procurement professionals to learn how to better evaluate marketing vendors.
- 78 percent of marketing leaders in “very effective” working relationships with procurement tend to also involve digital/e-commerce functional groups in marketing sourcing decisions. This points to a greater maturity in digital.
Marketing should aim to leverage procurement’s expertise to evaluate and select the right agencies/vendors that can provide value to the brand and can align media buying and other activities to the larger business strategy.
“Think of procurement as a strategic partnership that spans planning, vendor analysis, selection and management, rather than a box marketers need to check in contract negotiations,” said Donovan Neale-May, executive director of the CMO Council, in a news release. “A rudimentary level of involvement will likely not generate any significant value for marketing.”
CMOs should involve procurement:
- To develop a global and local marketing sourcing strategy and establish sourcing processes.
- To create a framework for identification and selection criteria, performance metrics, etc.
- To optimize MarTech planning, vendor evaluations and contracting for better integration and alignment with the overall digital transformation strategy.
- To review the existing agency landscape and contracts, and to consolidate rates and spend.
“Considering the uncertainties in the current socioeconomic environment, marketers are facing increased pressures to elevate performance and meet short- and long-term goals while facing added pressure on budgets and spending,” said Jason Galloway, customer advisory leader and marketing consulting practice lead at KPMG LLP, in the release. “Marketers can generate more value through a closer, more strategic partnership with procurement, leading to more robust marketing sourcing, management capabilities, and measures to assess performance. In fact, the new CMO Council report shows that the majority of marketers that have an effective working relationship with procurement have greater maturity in digital and could potentially unlock revenue growth through MarTech.”
“At KPMG, we help CMOs build an effective marketing-procurement partnership that can improve procurement cycle times, vendor price competitiveness, and vendor innovation, all while meeting customer expectations,” Galloway concluded.
Download the full report here.
The report is based on a survey of over 200 marketing leaders across B2B and B2C industries. Additionally, we conducted in-depth interviews with executives at E&J Gallo Winery, Commvault, Audacy and more.