Marketing Services Procurement – insight from Thomas Holzapfel at ProcureCon

Thomas HolzapfelWe featured the excellent ProcureCon Marketing event last week, and we'll have some further highlights from it over the next few days. Today, it is the session from Thomas Holzapfel, Global Category Leader, Marketing at Deutsche Telekom, whose role is as lead for all sales and marketing procurement at the huge telecommunications firm.

He stressed the breadth of the category , which means focusing on both cost cutting and value building. Telecoms firms are facing declining revenues in certain core sectors so that makes new products and partnerships key to drive top line revenue in new areas. That means marketing has three key goals - invest in growth, support the core, and manage with reducing budgets. But the "low hanging fruit" has been picked, in terms of cost reduction, so procurement has to be smarter to achieve all those goals.

Each of these three objectives requires different approaches in marketing and procurement terms. So Holzapfel considers procurement strategies very much at sub-category level. Where there isn't clear competitive differentiation, driving down price through pretty aggressive commercial activity has been key - much of the Print spend falls into this category.

Where the spend is "core", then the focus has been on improving relationships with key suppliers and driving effectiveness rather than simply cost.

And in the final case, where the firm is investing, then new ideas and approaches and an element of trial and error come into play. "This is more fun" as he put it! But he wants his procurement people to be able to work well across all three models and move between the three modes of behaviour.

Bayern shirt

An example of innovation was the Bayern Munich football shirt to celebrate the unique triple (Champions League, German League and Cup). Deutsche Telekom sponsor the club, so they used their "T" logo in this design, which has become a huge hit - and great PR for the firm!

Holzapfel then identified two "blind spots" in many firms. Firstly, those areas with low spend but high differentiation, where spend may be rising or have a major impact. One of those is technology related to marketing - Gartner says that by 2017, the CMO (Chief Marketing Officer) will spend more on IT than the CIO, with areas like CRM and online marketing to the fore. So is the job of marketing procurement to support the CMO or support just Marketing spend? Holzapfel thinks he should address everything of interest to the CMO, so his role will cover more IT procurement in effect over time.

The second often neglected area is online marketing and sales, where spend is growing quickly and many procurement people have not yet got to grips with the market.

Finally, he covered how procurement can gain credibility in this field and avoid the bad press we sometimes get for not understanding how agencies work and so on. "Define your values and your USP (unique selling proposition", he says. Create a roadmap for what you're wanting to achieve, then build relationships for trust and respect, with both internal and external stakeholders.

All in all, some  very interesting thinking, particularly around his ideas of segmentation and looking at differentiation, and all very well presented - thanks to Thomas.

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