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The World Federation of Advertisers (WFA) is to offer both members and non-members the chance to benchmark their marketing procurement services against advertisers.
The aim is to showcase the value that procurement brings to marketing organizations and provide companies with a way to assess their level of marketing procurement maturity while also identifying the areas for improvement. By focusing on the benefits of collaborating with marketing teams and agency partners, it aims to dispel some of the criticism that surrounds the role of the procurement.
Research carried out as part of the development of the new tool shows that many of the biggest global brands have very mature marketing sourcing functions that are well integrated with the management of marketing activities.
The new service will require brands to complete an online survey that can be used to test both the sophistication of their procurement team as well as the organizational readiness of the whole company to embrace the potential improvement that such practices can provide.
The results will provide each company with a measure of its marketing procurement maturity, assessing its current approach to effective and efficient management of marketing activities compared to both the ideal and current best practice. It will also identify skills and resources they need to develop across both marketing and procurement to improve performance in this area.
Previous research carried out in 2010 identified a five-stage development path for marketing procurement and highlighted four key measures of performance – managing money tightly, identifying and working with the best suppliers, using integrated and streamlined approaches to manage marketing and developing structures for continuous improvement.
The benchmarking service is offered in conjunction with SPIRE, a London-based consultancy, and is informed by a second wave of research into marketing procurement practices at WFA member companies.
Covering more than 45 companies with a total marketing spend of around $60bn globally, the research found:
• Overall, the effectiveness and efficiency of sourcing teams has increased marginally since the first wave of research in 2010. In 2012 there were just 5% more “good or excellent” performance scores than in 2010.
• The performance gap between the most and least advanced organisations is getting wider. In 2012 the bottom 25% of respondents scored 40% lower than they did in 2010. In parallel, performers in the top 25% improved by 5% on 2010. On average, the best performers score six times better than the weakest ones.
• The biggest improvements have come from better money management and improvements in finding and working with the best suppliers, where organisations show clear gains compared to 2010.
• The tenure of the procurement team and their integration with the marketing planning process strongly correlates with advanced performance scores. More than half of the most advanced sourcing teams have staff with a background in marketing – usually more than five years.
• Although it varies by category, the most advanced performers have much higher levels of centralisation of spend management. Across 18 key categories of marketing spend, there is significantly great centralisation among the best performing companies.
Said Steve Lightfoot, Senior Manager, Global Marketing Procurement at the WFA: “There are many misperceptions around the level of marketing procurement maturity. This research shows that while different capability levels exist in the marketing sourcing space, the best-in-class teams are really excelling. Our aim is to help all sourcing teams move along a maturity path to ensure that this function continues to deliver value to the business that includes, but goes beyond, cost targets. We aim to model this development over time and offer a global benchmark for marketing procurement excellence.”
Said Paul Duxbury, Co-founder at SPIRE: ”What this research underlines is the importance of co-operation between marketing and procurement. While the lead role in areas such as managing money and finding the best agencies will naturally fall to procurement, areas such as applying best practice and introducing systematic approaches need to be driven by marketing. The most advanced organisations recognize the need for deep seated co-operation between the two functions.”