Here's How Adidas Has Procurement and Marketing Working Hand-in-Hand
Brought to you by WBR Insights
Whether your business operates in the B2C or B2B space, those people responsible for the procurement of marketing need to access a range of services.
PR, communications, data services, digital marketing, social media, and creatives for both TV and radio campaigns are just some of the services which marketing professionals are responsible for procuring on behalf of the brands they represent. They must negotiate with a range of stakeholder's including media agencies, marketing companies, content creators and more.
The budgets for marketing can be enormous as well, with many big brands spending more on promotional efforts than they do on considerations such as logistics and warehousing. However, marketing procurement has a bit of an image problem, with research suggesting that only five percent of professionals would rate the perception of the sector as highly positive.
However, sportswear giant Adidas has plans to change all that.
To help create a more harmonious and collaborative future for the world of marketing procurement - and one which will improve both public perception and the bottom line of the sector - Adidas has formed a team of twelve marketing procurement heavyweights.
"Pretty much all marketing procurement leaders are conscious that the perception of their discipline is not always positive, and they want this to change," said Global Marketing Sourcing Manager for the WFA, Laura Forcetti. "Many of them have already moved far beyond just savings and look to understand value and contribution to growth by focusing on what actually matters to their business."
The World Federation of Advertisers' Global Sourcing Board has a mission to create formal best practice standards for marketing procurement professionals to follow and aid any procurement business looking to progress from cost to value through better spend management, negotiations, and weeding out unscrupulous operators.
One of the main issues with marketing procurement today is that it's often seen as a race to the bottom, with intense pressure put on professionals to cut costs, challenge agencies, and reduce fees. However, while this attitude may look good on the bottom line in the short-term, it creates an environment of poor quality and bad business relationships which ultimately results in bad sales and a negative impact on revenue.
"Any fool can cut the cost of a creative agency," said Global Marketing Procurement Director at Adidas and Cochair of the WFA Sourcing Board, Barry Byrne. "Anyone can say 'Cut costs by ten percent or we're not working with you' - the brand manager can do that, and if that is all the marketing procurement team provides, it is simply slowing down the process. Marketing procurement needs to flip it, and say to the marketing team, 'I'm going to work with you on this project, and I think we can release 20 percent value, and you're going to have that 20 percent back to reinvest behind other campaigns that you're working on."
The main new attitude Adidas is trying to promote is that the time has come for marketing and procurement to stop operating independently - with conflicting goals - and start working together as a single cohesive unit, aligned with the brand's objectives.
One way in which Adidas is leading by example in this regard is to start reducing its reliance on short-term metrics and begin thinking in much larger terms. While short-termism will always have a role to play in any business - quarterly reports to shareholders will never not be a thing - it's also important to consider the long-term health of the brand.
Too many brands - the video game industry is a good example of this - only care about whether their strategy is making them money right now and give absolutely no consideration as to whether the practices being deployed are sustainable or not.
Adidas is shooting for a 60/40 split in favor of short-term metrics, which represents a significant increase in the weight for long-term media ecosystems.
"We're gradually beginning to invest much more in our brand," said Adidas Global Media Director, Simon Peel. "As we've done that it's correlated with our growth. It's representative of a new way of thinking within the organization which is about brand desire and looking after the long-term health of the brand. And it's a big company and it's old, so that cultural shift takes a long time. It's not any one person or any team that's against it, it's just there's a lot of legacy, structure, culture that you need to begin to effect and it's a slow burner."
With a whole new organization setting out to change the way marketing procurement works and Adidas practicing what it preaches by getting its own house in order, it's great to see big brands changing the game for the betterment of the whole sector.
The relationship between marketing and procurement is sure to be a hot topic at ProcureCon Canada 2020, taking place in May at the Marriott Toronto at CF Eaton Centre, ON.
Download the agenda today for more information and insights.