Marketing Procurement – A Push for Simplification (Part 1)

The morning session at ProcureCon Marketing’s Day 1 in London recently tackled the subjects of simplification/streamlining and the future of agency roster models. The first panel session featured some big brand names:  LVMH, the multinational luxury goods conglomerate, with Head of Marketing Procurement Valérie Revol; BT with GM of Marketing Procurement Paula O’Reilly and Mondelez, the multinational confectionery, food, and beverage company, with Director Global Procurement: Trade Marketing and Brand Activation, Damian Ellis.

They were thinking about the complexity in the marketing and agency landscapes and whether advertisers would benefit from a more seamless integration and a one-agency touchpoint. Would this be more beneficial to their brands? They thought about how complex their businesses are, alongside the growing complexity in media channels, and where there might be opportunities to streamline; about whether there is a move back to consolidation and the full service model and whether there is a growing trend towards bringing some services in house.

First, they were asked to rate the simplicity of their category strategy arrangements, on a scale of 1 to 10 with 1 being the most simplistic. As you would expect, with a firm as big as LVMH for example, where Valérie is overseeing 70 brands, their level of simplicity is off the scale! While Paula, with 3 brands to oversee, put the level of simplicity at between 1 and 3 for the core agencies, but she made the valid point that things are different when it comes to the long tail in terms of complexity, as most people would attest.

So they were asked whether more simplicity is desired. And overwhelmingly the answer was yes, especially as there are more and more channels now. But, as put by Damian, you have to choose your battles. Ideally, you can keep the level of complexity you want, so long as you stay agile. Senior stakeholders want shorter tail and less suppliers, Marketing wants to work with partners. By having one interface managing that complexity in the background, you can satisfy everyone’s needs.

But what does simplicity look like? According to the feelings of the panel, it’s having the best agencies, but as few as possible, who can deliver all your needs for all categories, and tailoring the individual process for each. They weren’t offering that they would actively go out and seek this model, but if they were to approach the best agencies for them, and they were all under one managing umbrella, so much the better. So basically, accountability is needed, and desired, but not to the detriment of quality and delivery.

That, we think, begs an interesting question for the industry. Will the huge pace of change we are seeing now, with the rise of big companies, like Saatchi, Deloitte, Accenture, buying up agencies and stitching parts of them together to create hand-crafted models, continue? And will the likes of what we have seen with P&G’s proposed cuts to its agency roster of 50% by the end of this year, bringing more media capability in-house, become a common theme?

The panel’s thoughts on bringing more media roles in-house were mixed. Marc Evans, Marketing Director at Direct Line Group, had said earlier in his opening keynote that this model has drawbacks, and should only be considered for some areas. Paula explained that they had tried to do this with some types of insourcing, copywriting for example, but finds that generally CMOs do not favour this approach, only using it for the low-risk work, like website updates for example. Valérie reminded us that, while this can be an efficient approach, very much for the massive brands, in their case like Dior, you have to be able to satisfy both cost and quality issues. And Damian added that, if you move to an in-house model, you don’t get the ‘freshness’ of a creative agency.

So that’s the dilemma in the marketing procurement space it would seem. While we want structure and rigour, we also need creativity and flexibility. Despite that, it was predicted that with the rise in the importance of content-led advertising, more and more firms will still see content development functions brought in-house within the next five years.

A few questions from the audience instigated some final thoughts from the panellists:

  • As there is more competition in terms of agencies and channels, naturally there is more conflict. But you need to look at the risk level, and address each on its own.
  • And if you want to streamline you have to soften up on conflict.
  • Once you’ve cracked your strategic agencies, don’t forget to move on to the long tail – supplier reduction is harder there.
  • Governance and support are key: agency governance and lifecycle management, and support from stakeholders, otherwise you are held back by lack of quick decision making.
  • You’ll get push-back on simplification because of the status of current relationships, to overcome that you need to align on objectives.
  • Finally -- brands need to trust their agencies!

Which brings us nicely on to Part 2.

 

 

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