The driving force behind any focus on procurement is almost always the chief financial officer and the marketer's finance department. It's the CFO who made it a priority to aggressively tackle cost cutting to improve the bottom line, in turn putting all areas of the company's spending -- including advertising -- under the microscope.
Perhaps the most glaring evidence of the broken three-way communication between finance, procurement and marketing is that it's rare for CFOs to be fully briefed by marketing and procurement, especially with regards to the importance of investing in key agency relationships. Without this information, finance has a tendency to see savings in one dimension, that is, as funds to be taken from budgets.
Gone are the days when advertising and marketing were "hands off," so it's vital we all stop and rethink the role of the CFO in marketing and procurement decision making.
Personally, I have been involved in too many situations where CFOs and finance are in the dark about what ways marketing -- and marketing procurement -- are working with agencies to optimize the relationship and drive value. In fewer cases, I have worked with members of a CFO's team who have a great pulse on what is going on in their company's marketing department. Importantly, these are people who understand the importance of detailed marketing campaigns and that provide sound council in areas such as marketer-agency financial disputes.
To be clear, I'm not suggesting that finance needs to participate in agency briefings and pitches; rather, they need to simply be informed. For example, a CFO and his or her finance team should be made keenly aware of what compensation and sourcing models are in place, and understand how these models are driving both efficiencies and revenue from agency relationships.
I recommend that marketers start making sure their CFO and finance teams have a solid grasp on the world of agencies, marketing and marketing procurement. This can be accomplished by ensuring that:
If you can create a bridge between marketing procurement, agency partners and finance, the result will be informed discussions between clients and agencies on investment of marketing dollars, including reinvestment of any savings offered by the agencies. Ultimately, employing this strategy will go a long way toward avoiding the finance department making cuts to marketing budgets while operating in a void.
|ABOUT THE AUTHOR|
Brad Dehart serves as practice leader for marketing-services procurement at ICG Commerce in King of Prussia, Pa.