WFA offers new procurement service as its research shows most advertisers are making a hash of it

The World Federation of Advertisers (WFA) is to offer both members and non-members the chance to benchmark their marketing procurement services against some of the world’s biggest advertisers.

The aim is to push the value that procurement brings to marketing organisations and provide companies with a way to assess their marketing procurement while also identifying areas for improvement. The WFA says that by focusing on the benefits of collaborating with marketing teams and agency partners it can dispel some of the criticism that surrounds procurement (which is not at all what it used to say).

The WFA also claims that many of the biggest global brands now have mature marketing sourcing functions that are well integrated with the management of marketing activities.

But a more obvious conclusion to draw from the research accompanying the benchmarking launch is that the level of ‘improvement’ among top performing companies is tiny (five per cent in two years), hardly a glowing testament to the world’s ‘biggest and most sophisticated’ advertisers. The worst performers (the bottom 25 per cent) are now 40 per cent worse than they were two years ago, suggesting they’re not very good at all. This does rather indicate that those in the middle are not too bright either.

On the positive side it seems there’s a belated admission by advertisers that procurement should be driven by marketers not bean counters and that relationships with suppliers (and not just financial ones) are actually rather important. Which is what critics of procurement have been saying for years.

The new benchmarking service, offered in conjunction London-based consultancy Spire, is based on a second wave of research into procurement practices at WFA member companies.

Covering more than 45 companies with a total marketing spend of around $60bn globally, the research found:

• The effectiveness and efficiency of sourcing teams has only increased marginally since the first wave of research in 2010. In 2012 there were just five per cent 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 per cent of respondents scored 40 per cent lower than they did in 2010. Performers in the top 25 per cent improved by five per cent on 2010. On average, the best performers score six times better than the worst 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.

Steve Lightfoot, senior manager, Global Marketing Procurement at the WFA (left) says: “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.”

Spire co-founder Paul Duxbury says: ”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.”

Hmm. Duxbury may be right on some of this but can it really be true that finding the best agency ‘naturally falls’ to procurement people? What qualifications exactly does he think they have? Many of them don’t seem to be that good at saving money, which is what they’re supposed to do.

It seems the WFA and its advisers have still to see (all of) the light.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.