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George Roumanis, Global Partner, RightSpend

The procurement services industry is currently on an upward growth trajectory. According to our analysts, more and more organizations are recognizing the value of partnering with all types of service providers of all skill sets to help them formulate and execute business strategies to grow their business and their integrity. Partnering seems to be the way to go, not just to fill the gap a company may have in its own arsenal of skills, but to grow together and better serve customers.

The procurement services space is evolving into an ecosystem that can be leveraged when buyers know what to look for. That’s why we spoke to a Marketing Procurement Services expert to better understand why you might need a partnership, how to spot a good partner, and what they can offer you.

George Roumanis is a Global Partner at Marketing Procurement Specialists RightSpend, an online platform and consultancy providing fact-based insights into marketing agency fees, costs and relationship development.

“Of course, agency sourcing is something that procurement can do in-house,” he explained, “and many do. But getting a better deal for your money, getting more ROI from your agency and for your brand, and improving your value proposition to the company is easier to achieve when you don’t just have expert advice, but insights from real data that back it up underpin high.”

Why does marketing procurement need a strategic partner?

Roumanis explains that while marketing procurement often has its own data at hand, such as B. how many agencies are on his list or how his own agencies price lists compare for similar roles, but this is not enough to enable an organization to make good spending decisions in that area. Internal data assumes that your internal spend base is competitive from the start. Internal benchmarks are moving targets, and organizations can always get agencies to agree on the price of a specific role or job so that it compares well to those internal benchmarks. But what if this reference price is actually lower externally?

“Only using internal benchmarks,” he says, “means you’re probably leaving something on the table because you’re not using real-time data that comes from a variety of sources, multiple customers, and multiple industries. A larger pool of data gives you a more accurate basis for comparison.”

The ability to benchmark from entering the market, researching, finding an agency, shortlisting vendors, selecting an agency and contracting with that agency to maintaining relationship expectations is critical to making the right decisions meeting. And this is where a specialized third party is of tremendous value.

So what makes a good benchmarking tool?

The answer to that question is data. Data is the critical element here as it brings a level of clarity and confidence to your marketing sourcing decisions. The right benchmarking tool, which not only provides transparency but also accuracy, allows marketers to take a value-based approach to their negotiations.

“Traditionally, agencies have not been very transparent about the way they structure their marketing costs to their clients,” explains Roumanis. “What marketing procurers need is a way to see those costs in an aggregated and anonymized way, whether they’re hourly rates or other components like overhead and profit margins that feed into agency fees. This allows them to understand what a fair market price should be for the elements of a particular project that they have hired agencies to carry out.”

Of course, a project does not end after the negotiation. Procurement must continually assess workloads to ensure their agency retains the competitiveness it brought in in the first place.

“A good tool allows you to have a view that’s not just based on rates, but also on scope and outcomes,” Roumanis continues. “For the work you ask your agency to do, they should clearly state what the cost should be, which people should work on which project, how many hours it should take, and so on. If you can see all costs through a lens, you can resize accordingly.”

Ideally, your tool will provide data from many different types of agencies, from traditional creative ad agencies to media planning and buying agencies to promotion, PR, and digital marketing.

“This is really important,” he explains, “because agency structures are different: their overheads, how they structure their bonuses, how they pay their executives, and so on. This can vary significantly depending on the agency type. And it should also have insight into regional and global markets, as fees and costs will vary by country or even city, so a good benchmarking tool will take all these factors into account, including economic ones.”

How do we know we can trust the data? …

All well and good sourcing tools that help marketing sourcing organizations make sound decisions about their spend. But how do we know we can trust the data we base our strategic decisions on?

“To make data-based decisions instead of emotional ones, you need data that comes from the people on the ground who are actually using the tool,” he explains. “What makes this type of tool unique is that its data comes from world-class brands that input their anonymized data on what has already been negotiated, agreed and finalized between clients and agencies. You don’t want data based on price list surveys or RFP prices before negotiations have taken place, or standard prices from an agency to a potential client. The real data that is the result of all the hard work already done is the most valuable as it provides aggregated and anonymized benchmarks that are proven to be achievable.”

… and how do we know that we can trust our partner?

Partnerships come in many forms – whether it’s a database of insights to help you in your strategic decision-making, or a team of professionals advising you on what to do with that data, both provide value that drives better outcomes for people Leads your marketing spend.

Some partners have the ability to manage the platform on your behalf, taking on your scope of work and issuing analytics-driven reports that drive good decisions. This can help you fully prepare for the general discussion with agencies. A good partner will also be able to help you negotiate, explain what to look for when evaluating a specific scope of work, and highlight the top reasons for deviations.

As an example, Roumanis explains: “Let’s say an agency proposes a fee of one million dollars. Actual benchmark data may indicate that the fee for this should actually be $900,000. So look for a partner who can work with you and your marketing stakeholders to understand what’s causing that $100,000 difference between agency bids and the benchmark. It could be salaries, the number of full-time equivalents in the workforce plan, or above-average overheads.

“The point is, whatever type of partnership you choose, the offering must be backed by real-time learning from the world-class marketers in the industry.”

It is the man-machine mix that creates clarity and trust

Whether an organization has had a marketing purchasing team for decades, has just started the department, or simply doesn’t have the capacity for one at all and is spreading that responsibility across their pool of purchasing agents, third-party marketing purchasing expertise is something that can be done make a big difference in marketing, procurement and finance.

“When looking for a good marketing sourcing partner,” explains Roumanis, “it’s wise to find a company whose people come from the marketing sourcing world. It’s that simple. You want people who know your market firsthand. They’ve seen it all before, bring credibility to your team, and understand the issues you and your agencies face. You will have found yourself in this negotiation situation; they will know what the agency’s talking points will be; and they will know what your answer should be. You know you can trust them because they’ve walked in your shoes – they have the experience, but most importantly, they bring clarity. And that clarity comes from having the real data you can draw on to ensure these negotiation points are based on the most up-to-date benchmarking information you can get.”

The best results come from both human experience and machine intelligence. This mixture is the most valuable.

For example, the RightSpend platform estimates over $10 billion in agency spend annually Data defined by the best marketers and brands worldwide Covering 75 global markets and 10 agency disciplines, it is anonymized and blinded with real-time information that is regularly updated to make impartial decisions.

“It’s this machine-driven clarity coupled with human insight that makes for a powerful combination,” he continues, “the machine gives you the data, the humans give you the interpretation of what that data says about you.”

But as he adds with all clarity and impartiality: “Benchmarks are trend-setting, they should give you orientation. So look for a partner you can trust because their knowledge is backed by transparency and solid data to help you make your own informed decisions.”

This Brand Studio article was written using RightSpend