Procurement focus evolves from reducing cost to all-round efficiency

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Brussels, December 14: Research by the World Federation of Advertisers and marketing effectiveness consultancy Spire has identified five stages in the evolution of a company's marketing sourcing expertise.

Maximising Marketing Efficiency found that experienced marketing procurement teams are increasingly focusing on building third-party relationships, optimising process and driving learning and improvement in addition to their responsibility for managing money well.

While procurement has been widely criticised by agencies for a focus solely on lower fees and reduced media costs, this research finds that companies responsible for more than $50 billion of global marketing spend are seeking alternative strategies that add value for both client and agency.

Increasingly sourcing specialists are looking to increase the impact of marketing communications as well as keeping costs competitive. Overall global procurement specialists rank building third-party relationships as the most important element in their drive to improve the efficiency of marketing activities.

The five stages of evolution identified by the research are:

Traditional Procurement Levers: An early stage of development whereby the team's ability to manage money well by keeping costs down through methods such as supplier rationalisation is at least twice as important as any other factor.

Balanced traditional: Managing money well and building third-party relationships are both equally important and account for 80% of department focus.

Success through external partners: Building third-party relationships and leading supplier relationship management programs account for nearly half of sourcing time.

Seamless integration: The importance of managing processes comes into play as procurement seeks to streamline and make account management easier, partly through continuous learning and improvement loops.

Balanced Emerging: The most evolved stage with the four principle themes of managing money well, building relationships, optimising process and driving improvements ranked as equally important.

Progress up the path is driven by two factors, the capability of the procurement team and the readiness of the organisation to move beyond a pure cost focus.

Progress in both areas depends on a variety of factors including: company and business unit structure, marketing acceptance of procurement function and senior management advocacy of procurement.

Previous WFA research has shown that some companies have taken between 6-8 years to take nascent procurement involvement in marketing through to a permanent global and local strategic sourcing function covering the majority of marketing spend.

"Those companies that create the environment for procurement to succeed within the marketing category are best placed to generate skills growth within this function. Enabling marketing procurement to fully engage with the marketing spend creates the right conditions for breeding sourcing expertise that boosts marketing efficiency," says Steve Lightfoot, Communications Procurement Manager at the WFA.

"Procurement can only move as fast as their marketing colleagues and the wider organisation is capable of going, and understanding and responding to that reality is the key to unlocking the potential for driving effectiveness and efficiency in marketing activities," says Paul Duxbury, Director at Spire.

Maximising Marketing Efficiency is based on detailed research involving 85 senior global, regional marketing and procurement specialists. Collectively they represent companies responsible for more than $50 billion of marketing spend. Questionnaires were filled out in Summer 2010 and analysed during September and October.

About WFA

The World Federation of Advertisers (WFA) is the only global organization representing the common interests of marketers. Through its network of 58 national advertiser associations on five continents and over 60 of the world's biggest marketers, WFA represents around 90% of global marketing communications, almost US$ 700 billion annually. WFA champions responsible and effective marketing communications.



About Spire

The WFA commissioned Spire to conduct the Effectiveness and Efficiency survey. Spire were selected due to their specialist and expert knowledge of this subject area, through consulting work undertaken with a number of multinational marketing-led organizations. To request more information please contact Paul Duxbury at paul.duxbury@spire-ww.com