Marketing procurement organizations remain focused on cost as a key success metric. However, many are beginning to embrace the value of non-cost-centric metrics, and especially ROI measures, according to a new ANA (Association of National Advertisers) white paper.
Respondents to the survey associated with the new ANA white paper “Elevating the Role of Marketing Procurement,” were asked to rate the importance their company currently places on various procurement success metrics. Cost reduction, by far, is the most important metric currently used to measure the success of marketing procurement.
“Cost reduction and avoidance remain ubiquitous as procurement metrics for now,” said Bill Duggan, Group Executive Vice President of the ANA (Association of National Advertisers). “However, our research indicates strong desire and action, especially in mature procurement organizations, to drill down to more advanced and effective ways of measuring long-term success.”
Ninety-four percent of respondents – nearly all of whom are procurement professionals at ANA member companies – said they use cost reduction as a success metric. Similarly, 84 percent cited utilizing cost avoidance. Other procurement metrics commonly used today include agency/supplier performance improvements (72 percent), process improvements (62 percent) and risk mitigation (56 percent).
However, when asked, “ideally, what should be the importance placed on each [metric],” improving marketing ROI was top ranked, and over twice as many indicated its use is ideal than said they currently used it.
“A key concept some organizations struggle with is understanding marketing spend as an investment to be maximized and not an expense to be minimized. In that context, the role of marketing procurement is to help maximize the investment in marketing activities,” according to Terri Buns of AFLAC and co-chair of the ANA Procurement Task Force.
The white paper points to mature (15+ year) marketing procurement organizations as providing best practices for success metrics. Firms with mature procurement organizations are almost twice as likely to view improving marketing ROI as a success metric than firms with marketing procurement organizations five years or younger.
“In addition to providing a valuable benchmark for procurement organizations, this white paper will enhance marketer and agency understandings of effective procurement metrics,” said Duggan. “Aligning behind these metrics will streamline the procurement process and create winning scenarios for all three stakeholders – procurement, marketing, and agencies – especially given the increasing relevance of ROI measures.”
To download report CLICK HERE.