Masterclass Notes: Optimising marketing-vendor database costs
by Johanna McDowell (@jomcdowell) A well-known former banking CEO once said to me, during my 12 months when I was head of marketing at a large South African bank some years ago, that the problem with marketing departments is that they tend to “grow like topsy”. This kept me on my toes during that period — and certainly helped us think carefully about whether we needed to hire new people! Marketing suppliers may also be said to increase in the same way.
I’m finding more and more examples of companies where the number of marketing suppliers has tended to grow and grow for a variety of different, and justifiable, reasons over a number of years. Procurement departments, which are starting to become more and more important and powerful within organisations, are often tasked with streamlining or sorting out the duplications in suppliers. This may be quite an onerous task vis-a-vis marketing, simply because those duplications are less obvious than, let’s say, might occur when procuring furniture or more-tangible services and products.
While a tidying-up of a number of marketing suppliers might result in some economies, enabling marketers to negotiate better volume deals with a smaller number of suppliers for example, sustainability, geography and BEE will also be deciding factors in a vendor database clean-up. Then there are a number of highly specialised suppliers who might be the only people who are able to supply certain products and services. Cutting through all these suppliers needs to be a carefully planned and structured exercise in order to avoid losing those which might be vital to the success of a particular product or brand.
Among agencies, again, there are many which are fully integrated and able to supply almost all of the services that a marketing department may want and need, but increasingly, we’re seeing that almost 50% of CMOs (according to Agency Scope 2017/18) expect to have at least one or two specialist agencies within their typical mix of creative and media agency service providers. While many CMOs will admit that it would be ideal to find everything in one place, they know that it is almost impossible as there have to be pockets of specialisation in order to deliver high-level performance, especially across the digital spectrum of media and content, development and programming.
[Full disclosure: Scopen Global and Mazole Holdings (the company that owns IAS 100%) have formed a company in South Africa called Scopen Africa. Scopen Global holds the majority of the shares; Mazole is a minority shareholder. Johanna McDowell is a director of Scopen Africa, as is Cesar Vacchiano, global CEO of Scopen.]
Within an agency ecosystem there may be some possible savings that might result in a redeployment of funds from one area to another, depending on the needs of the marketing strategy and its objectives. Fine tuning of fees, retainers and production costs might at first look a little alarming but may well result in a far more balanced optimisation of the marketing budget — and again will help the commercial aspects of the business when it comes to negotiating budgets and pricing in the future.
Managing the marketing-vendor database is not only about cutting out duplicate suppliers but also about optimising budgets among a range of service providers so that maximum ROI is achieved but not at risk of a degeneration of quality. It’s a fine balancing act, requiring skills and patience in understanding a lot of different terms and industry jargon — which can add to the confusion within the marketing spectrum.
Johanna McDowell (@jomcdowell) is managing director of the Independent Agency Search and Selection Company (IAS), which is partnered with the AAR Group in the UK. Johanna is one of the few experts driving this mediation and advisory service in SA and globally. Currently she is running the IAS Marketers Masterclass, a programme consisting of masterclasses held in Cape Town and in Johannesburg. Twice a year she attends AdForum Worldwide Summits.
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