STOP ROLLING THE DICE WITH MARKETING AND SALES PROCUREMENT

Brett ColbertChief Procurement Officer

MDC Partners Innovation Center

Marketing Plan

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marketing is fundamentally persuasion,

and persuasion happens to be not a

science, but an art

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“because it purpose is to create a customer, the

business has two – and only 2 functions:

marketing and innovation

marketing and innovation create value – all the rest are

costs.”

Peter Drucker

Management Guru

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TOP TRENDS THAT WILL ROCK

YOUR WORLD

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o advertising accounts for $5.8 trillion in sales – 16% of all sales

activity in the U.S.

o advertising represents 19% ($3.4 trillion) of GDP

o advertising supports 20 million (14%) of jobs in the U.S.

o every $1 spent on advertising generates $19 of economic output

o every $1 million spent annual supports 67 jobs

o media is the world’s largest commodity

Positive Impacts of Marketing

Source: IHA

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But Sadly, Everything isn’t so Positive

The ailing agency-

client relationship is

so bad

that it resembles a

married couple who

“hasn’t had sex

since 1972.”

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marketing - driven by creative excellence, finding deeper insights, storytelling, sales lift and share increase, and trust-based favoritism

procurement - driven by cost reduction & avoidancemaximizing value and ROI, governance & compliance, & risk management

working in a model of engagement that was

designed for a world that no longer exists

…speed, quality and cost doesn’t

work anymore

so why are we measured

primarily by metrics that don’t exist?

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o agencies have faced a 4.5%-per-year annual compound decline in

retainers and fees per client since 1992, minus inflation

o a client that pays their agency $100,000 today would have paid an

equivalent of $450,000 years ago

o scopes of work [SOWs] are drawn up that don’t represent client KPIs,

translating into wasted costs, unsatisfied clients and margin erosion

o avg price for a pitch is $450,000

o it costs 7x more to acquire a new agency vs. retain one

o we’re paying consultants 5x more than agencies, and they’re not really

addressable spend

More Facts

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“more has changed in the

last 5 years than the last 100

in marketing

and more will change in the

next twelve months than the

last 5 years”

Jeff Chamey,

CMO Progressive Insurance

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o “Marketing needs to learn more about business; finance needs to take risks

they can’t always calculate.”

o Coca-Cola’s procurement team manages budgets with a new grasp on

marketing that understands scope and value, rather than just cutting costs,

and can broaden its definition of value to go beyond savings.

o “We taught supply-chain people softer skills like marketing and agency

compliance,”…“We’re thinking of creative ways to reinvest back, not just

cutting costs”… “We moved the marketing procurement team from the

procurement department into marketing”

Some are Doing Something about it

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JUNE 2011

NOV 2015

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THE NEW S&M

INVESTMENT PARTNERYES, SALES AND MARKETING REMAINS TO BE AN

INVESTMENT

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o procurement gets more collaborative - spending more time and

engaging sooner with other key stakeholders and external

partners

o goodbye to business as usual - new ways of working are forcing

change on the way procurement operates - and on the way

success is measured

o the technology agenda - procurement today is focused on

automation and collaboration

o the human challenge - as technology advances, attracting and

retaining the right team is one of the biggest opportunities to rise

above the competition

The FUTURE is HERE, is it Indianapolis?

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Marketing Services Marketing Communications Marketing Production Marketing Support

Advertising Agencies Broadcast Media Collateral Material (print) Fullfillment

Media Agencies Print Media Collateral Material (digital) Printing

PR Agencies Digital/Internet Meetings/Conference Displays Promotional items

DM Agencies Direct Marketing Pass through costs CRM

Market Research OOH/Social Media Decoupling Reports/Data Analysis

Meeting/Conferences

Marketing Category Overview

As a general rule, its easier (and less intrusive to marketing operations)

to address the areas in which people services are not being provided

123 4

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Team investments focused on talent, technology

1

Recruiting

new talent

2

Training/

Upskills

programs

3

Supply

chain tech

What are you doing to invest in the future while doing well today?

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WHAT DOES GREAT

LOOK LIKE?CATEGORY DRIVEN MARKETING PROCUREMENT

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1. ENSURE MORE CLARITY

2. GO SIMPLE(R)

3. DON’T ALLOW FOR CONTINUED BAD BEHAVIOUR

4. BE A BETTER PARTNER

5. INCREASE ACCOUNTABILY

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5 Keys to becoming GREAT

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FROM TOP TO BOTTOM

o there needs to be clarity of overall intent, “ownership” of the

category, overall relationship, and shared metrics for success:

- specific goals

- processes

- deliverables

- approvals/decision makers

- legal obligations

“Does everyone have the same definition of value vs. cost?”

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Ensure CLARITY

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o ask questions along the

way, and do what you

say you’re going to do:

- why are we doing this?

- what does it get us?

- is adding complexity,

adding cost?

- are we proud of the work

we did today?

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Go SIMPLE

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o once you understand how the work gets done, you can start to easily

implement improvements in the process – that is value (and

valuable)

o do you know how much internal behaviors cost?

o partners will usually attempt to change their behavior rather than

agreeing to pay more

o are you building a brand for long term, with no short term goals

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Don’t allow BAD BEHAVIOUR

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o “clients get the work they deserve”. How can you do your part to

ensure you are seen as a “good client”?

- establish a collaborative working relationship with the vendor

- understand their business model

- if you have to cut the fee, involve them in the goal setting of how to

accomplish this cut

do you highlight your value that goes beyond the size of the fee

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Make sure you’re a GOOD PARTNER

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o accountability shared?

o are the category strategies shared? and the goals of the

remuneration aligned?

o do you help define the needs of the business and what kind of

engagement is needed?

o can you support the vale of what is being asked in a deliverable?

are you a catalyst to help them get to better work. Faster. No

vendor wants to take a long time to do average work.

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Increase ACCOUNTABILITY

SO WHAT’S

WORKING?

LETS HEAR FROM YOU

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o Have you looked at Procurement Beyond Savings in the sales and

marketing category?

o What mechanisms have you created that brought change and

improvement from within?

o How should best practices be measured?

Let’s Discuss how GREAT you are

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“in the end, all marketing must be measurable. A key first step is to align

every marketing effort and dollar with its associated business outcomes.

this will go a long way toward being able to connect marketing investments with

business value”

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DIFFERENT WORLD, DIFFERENT METRICS

.

DIFFERENT PARTNERSHIPS, ALL DOING GREAT SHIT.

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2 0 5 5 E . C e n t e n n i a l C i r c l e

T e m p e , A Z 8 5 2 8 4

BRETT COLBERTCHIEF PROCUREMENT OFFICER

MDC PARTNERS

BCOLBERT@MDC-PARTNERS.COM

@ROCKPROCUREMENT

THANK YOU