Increased efficiency through collaboration
Sourcing marketing services is often not a priority in strategic procurement, even though they make up a considerable portion of indirect procurement budgets. Any conflict between marketing and procurement departments is often due to completely different perspectives, but this is exactly why collaboration pays off, as the different sides can form a value-enhancing partnership. We understand which ground rules to follow.
In many companies, marketing services are virtually exclusively sourced by the specialist departments themselves.
This means that employees primarily make procurement decisions based on their own marketing skills. The opportunities that strategic procurement provides to get more of out the same budget are still not being used enough and the effect that procurement can have on transparency, process efficiency and compliance is all too rarely recognised, so there is no early integration of procurement in operative and strategic marketing planning.
However, in our experience, there is the potential to make savings of 11-15 percent on the same marketing service. This can then be immediately reinvested and directly improve performance. So why is this value-enhancing partnership such a rare occurrence?
The following case study demonstrates how our systematic approach can help to identify inefficiencies and exploit potential Systematic media procurement for one of Germany’s leading stock exchange-listed internet groups with a turnover of €188 million who was faced with the task of finding a media agency for its companies.
The right agency needed to cover consulting, strategic planning and securing television advertising for business operations. The pitch needed to include different KPI objectives, previous data availability and short lead times. The companies involved also had individual requirements, countries and budgets to include in a flexible framework.
Firstly, we worked with the media company to coordinate its goals and relevant KPIs. This involved comparing and harmonising existing KPIs to create a common network of services for comparison.
The first round of tenders consisted of a quantitative and qualitative comparison of agencies. The quantitative comparison was based on selected benchmark prices, with the agencies having to quote for a specific time period for each company.
In the qualitative comparison, the agencies were asked key information about media planning, strategies and press as well as advertising booking, experience and team configuration. The agencies were also asked to provide case studies and references related to their expertise in the required field.
The second round of tenders included a set of tasks, such as developing an ad delivery strategy with appropriate TV channels, advertising placements, formats and specialist advertising, times and days. The agencies also had to consider set restrictions and client instructions, such as targets for securing a certain percentage of advertising slots at specific times.
The agencies were required to adequately bridge any intentional gaps in the brief and explain their approach. We did not carry out any previous evaluation in this round, but worked with the client to formulate open questions, which were asked during the agencies’ presentations. The final decision was made on the basis of detailed negotiations regarding discounts, reductions and team composition.
Our negotiations secured bulk prices, fixed costs after discounts and achieved transparency in terms of services. Our moderation and mediation between the companies enabled the project to be successfully completed within six months. The result is a new media agency and an increase in performance in the mid-millions due to qualitative improvements, quantitative savings and a free add-on tool.