Marketing and Procurement's Elephant in the Room: the CFO

Why It's Time to Rethink the Role of This Important Decision Maker

By Published on .

Brad Dehart
Brad Dehart
Sitting through industry conferences run by the Association of National Advertisers and others this year, and listening to heated conversations about the state of relations between ad agencies and client procurement, I've had a nagging thought. There is one critical party missing from the discussion around the challenges we're facing balancing value and cost. Hint: It's that C-level executive who brought marketing and procurement together in the first place.

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:

  • Experienced marketing procurement professionals are supporting the process. Marketing procurement professionals who understand the agencies, process and marketing industry are always the best at communicating cost reduction challenges and opportunities to the CFO.

  • Agencies continue to work with, rather than resist, procurement. However unpleasant, the new normal we've arrived at after the recession is that procurement's focus on optimizing cost and value will have a role in marketing moving forward. Provided shops are working with experienced marketing procurement professionals who make reasonable requests and understand their business, agencies should embrace these procurement relationships.

  • Procurement and marketing keep finance tied into activities with agencies and negotiation outcomes. This means making sure that finance understands the negotiations that procurement, marketing and agency partners have worked through and is kept abreast of decisions marketers make to reinvest any savings back into agency relationships.

    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.
    In this article:
  • Most Popular