Spend Matters welcomes a guest post from Tyler Adams of GEP.
The world of marketing is becoming ever more reliant on evolving technologies to drive engagement with potential consumers. The advertising technology space is especially cluttered with new entrants providing niche solutions to improve your organization’s targeted marketing. This industry includes Exchanges, Data Aggregators, Measurement and Analytics Systems, Ad Servers, and Demand Management and Demand Side Platforms.
The problem with this space is that even the most advanced of marketing organizations have trouble keeping up with the rapid changes in supplier base. Furthermore, procurement teams that aren’t advanced in their marketing and technology capabilities may find this space to be a daunting challenge to adopt. Not only is the terminology confusing, but the role that each player has and how these roles fit together can also be quite the conundrum to solve.
Ad Tech sales teams are bombarding marketing departments with phone calls and emails in the hopes of getting just a moment of their time. Their pitches are compelling, and most of their solutions can truly improve your company’s ability to deliver ads. However, without the proper sourcing practice in place, there is no way to be sure you are getting the best possible solution or the best market price.
With the help of the right procurement counterparts, savvy marketing organizations can take advantage of this growing and dynamic industry. As a team, this group of personnel must be knowledgeable and diligent in their evaluation of partners. In addition, they must have the bandwidth and capabilities to manage such partners and track their performance once they are implemented. If your organization is prepared to take the leap, this space is full of opportunities for improving marketing efficiencies at a low cost.
In this group of personnel, specifically procurement must come to the table with professionals who are willing to invest the necessary time into learning the space and developing the knowledge to evaluate suppliers coherently. This team should consist of both advanced technology buyers and mature marketing buyers. One without the other could thwart your ability to see a holistic picture of which partners will be able to provide the best solution and how easily their tech system will integrate with current partners and tools that are already being utilized.
Within this industry, competition is high, barriers to entry are low, and buyer bargaining power is strong. Procurement professionals couldn’t ask for better market conditions when approaching the negotiation table. Once potential partners are identified, be sure to leave no stone unturned. Get the most competitive rates, ask for reporting transparency, make sure you get the account team you’re expecting, include a rebate, and ensure operational efficiencies are included year over year. As always, make sure that these providers are operating at a sustainable margin. However, in an industry breeding competition their impetus is to earn new business that will develop into long term profitability, even at the expense of short term profit.
The advertising technology industry is ripe for consolidation. As big players begin to get gobbled up by the likes of Google and Yahoo, buyer power will weaken and the impact of procurement’s role in the process will be relinquished. Act now, take advantage of the opportunity that the market is currently providing, and make a name for procurement within your marketing organization.
For more interesting thinking on procurement, visit the GEP Knowledge Portal.