Why procurement might take over marketing one day

This post is by ‘THE BUYER’ – an anonymous former senior manager in the procurement profession who offers an occasional perspective to the world from a procurement driven point-of-view.

Management speak is shallow: Results are not

Long ago, this buyer used to be a Marketing Director for a firm led personally by the owner of the company – a billionaire working as the CEO. Which is a stressful occupation. If you think corporate life is hard climbing the greasy pole, try reporting directly to a billionaire.

Or reporting to any entrepreneur for that matter, of any size enterprise. They tend to conform to stereotypes it seems … impatience, flexible, impulsive, incisive, demanding, generous, disrespectful, innovative, inspirational, infuriating – all before lunchtime usually.

They are both good and bad. Fast and slow. Generous and parsimonious. Clear and confused. Red and blue.

Anyway, one thing that all entrepreneurs have in common is their willingness to challenge the status quo. They take things very much at face value, rarely hesitate to challenge perceived waffle and can, quite impulsively, drive through the obscurity of management speak and corporate culture to identify the heart of the matter. They are no respecters of convention.

What that all means is that they don’t take any crap. Corporate guff is shallow and full of it. Entrepreneurs call it for what it is. They see straight through it. They respect results. The ends justify the means. As long as those ends are clear. And measurable.

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Entrepreneurs and their marketing investment

This tame billionaire seemed especially hard on marketing … unfortunately led by me. The marketing discipline represented everything the entrepreneur was inherently suspicious of. Featherweight qualifications, corporate jargon and barely credible business cases.” Subjectivity, visceral justifications and high creativity – “I could do better myself with fuzzy-felt” as he said; more than once.  Funny looking suppliers and an office full of giggly Gen Ys doing seemingly little just emboldened him – on bad days we were labelled the “colouring-in department.”

Most of all he hated the flimsy. Approximations, vicissitudes and fluffy pitches. Especially when defending a piece of published work or a campaign gone awry after publication. Rather than a business case or pitch before launch – “my eight year old daughter could do better.”   It is doubly hard to ask for forgiveness rather than permission from an entrepreneur.

They want proof. Proof that validates what they instinctively feel is right. They want their insecurities made secure. For that is often what is driving entrepreneurs deep down. They feel inadequate and want to prove themselves right. They want to win.  Add their herculean drive, and there is often no stopping them.

Which is why they want results. And only results. Not platitudes, not flattery, not warm fuzzy feelings. Not “the audience liked it” nor “it was a good campaign” or even “it definitely is working, give it more time” and absolutely not “we have been bold and need to stick with it.”

They want results. Measured, hard, down and dirty results. Proof. Mathematical proof. An algorithm. A certain investment curve to back up their gut. Their money actually – “you sign the bloody cheques” he said once as he threw his personal cheque book at a ducking marketing director.

We were growing quickly. Too quickly. Exponentially. It was hard to keep a lid on it. Revenues grew from over $30m to over $600m in less than five years. Marketing was tasked with fuelling the growth and “oh, by the way” build the brand. It was an attractive proposition.

Soon, investors wanted to buy a stake. The CEO needed the cash to keep investing. Continually doubling-down on his bet. They wanted a due diligence process. But it revealed sloppiness. It revealed a lack of essential business discipline. Cash was going out too fast. Where was it going, exactly?  Was it driving the business? Was it worth it? How did we know?

The new secret investors were underwhelmed and paused. The billionaire unhappy. Not with them “pausing” on their investment. He didn’t really want it anyway. He was annoyed by the slight. By the proof that he wasn’t running a perfect business. That cash was getting wasted.

So, he employed the audit firm that did the due diligence (a big six firm starting with a K) to do some more due diligence – for him. KPMG could sign the orders coming out of marketing; it would stop silly spending, and bring business discipline. It was a turgid two weeks that it lasted.

Imagine the embarrassment of a marketing director explaining to an auditor why we needed to buy some merchandise, or pay a copywriter, or send 25k to a promotions company to cover the prize fund, or hire the box at the races or even buy an off-the-page advert (remember them?).

The billionaire wasn’t buying these things. That wasn’t the deal. He was investing in business success. He just wanted an algorithm that proved these things led to business – to sales. That’s all.

How not to save money in marketing

One day, in a last-resort effort to keep him at bay, Wanamanker’s quotation slipped out, in a last minute, last resort justification of the total $40m marketing budget that was so manifestly not driving enough leads to the hungry sales team of our super-fast growing company:

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.  – John Wanamanker

“Brilliant!” he cried in full voice, a voice that echoed around an eavesdropping open office of trendy cubicles. “Mate you’re a genius.”

The billionaire yelled for the CFO to urgently come running, “… this guy is a genius!” he exclaimed, referring to me, “he has just saved this company $20m: make sure he gets his full bonus this year.”   He glanced reassuringly straight at me, with a knowing wink, “just do the good half, eh…”

And with a wink it was sealed. The marketing budget was duly cut in half. There and then.  For weeks afterwards I was paraded as the genius who saved the company $20m.

The boss wanted effectiveness in his marketing investment. But without proof of it, he’d accept efficiency instead. The cut-budget demanded we slaved to get the best value out of every dollar spent in marketing.

We introduced better processes, purchase orders for every demand, recycled old materials. We streamlined the roster, cut staff and saved wherever we could. We worked closely with procurement, we improved our interface with suppliers, worked hard to align agencies to our true strategic needs and rethought our marketing investment from first principles.

For us efficiency led to effectiveness ….

Measure or die

Because, crucially, we learnt to measure.  For we needed hard guidance on where we could cut ‘safely’ and where we might be cutting our own throats? What was working, and worthy of more investment – doubling-down; and what plainly wasn’t? We needed facts not feelings, not traditions and not what “the agency thinks.”

Entrepreneurs are, ironically given the perceptions of them, not gamblers. They hate risk. They want certitude to build on their certainty of vision.  Our dear leader wanted more certainty from his marketing investment to fuel his growing business that needed cash to grow product availability – but needed demand to grow as well to satisfy bulging stock levels.

The moral

Entrepreneurs work at the vanguard of business. They see opportunity, they innovate to meet it and they see that success is largely in the margins. They are the purveyors of heresy; early blasphemies that become great truths for all business to use. They are business leaders.

“All great truths begin with blasphemy” – George Bernard Shaw

What entrepreneurs see today, business sees tomorrow. This entrepreneur put procurement methodologies into marketing to get enough efficiency to build effectiveness. And for a fortnight there, we reported to an auditor who reviewed every dollar we wanted to commit externally. We effectively reported to procurement.

Business needs better value – every quarter. Not just to satisfy thirsty shareholders – but because everybody wants more. The customer, the shareholder, the boss, the staff and even you. Without good metrics and sound strategic alignment, business leaders will increasingly question their marketing investment.

Procurement has saved good money in most categories of expenditure for the firm. Why should marketing be exempt from efficiency?

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About The Buyer

THE BUYER is an anonymous former senior manager in the procurement profession who offers an occasional perspective to the world from a procurement driven point-of-view. Formerly, The Buyer posted weekly blogs on the premier news site for the procurement profession throughout Australasia at PP Online Over 400 postings of ‘The Buyer’s Blog’ are still listed online covering all sorts of procurement related topics and opinions on matters related to professional procurement.
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