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By Tom Denford
Procurement needs to own the optimization opportunity to deliver more marketing value to the brands they serve. Tom Denford of ID Comms explains why ‘Cheap is good, but good is better’
“From a finance perspective, optimization means you can be confident that investments are working hard, and that procurement has played its role as both the financial guardian and strategic partner for marketing”
Let’s get one important thing straight. We are past the point of procurement always being called the ‘bad cops’: The whole marketing ecosystem now needs procurement to be strong. Marketers, brand managers, finance and agencies all need procurement to succeed and be aligned to the same ambitions and objectives.
My firm, ID Comms, is a trusted consultant, advisor and auditor to many of the world’s leading brands. We help focus marketing and procurement teams on optimizing the value they get from their investments in media and advertising. Over the last decade we’ve certainly seen “The good, the bad and the ugly” of marketing procurement as the ANA’s excellent recent report dubs it. These days we see more ‘good’ procurement, more often.
Value can be created or lost (and sometimes hidden)
We increasingly see procurement’s role as guardians of value to brands. Procurement supports the needs of the business to secure the right resources, aligned to the right KPIs and ensure that all parties are working efficiently. In doing so, procurement also has a front-row seat and an opportunity to see where value is created, lost, or sometimes hidden, in the marketing communications process.
Procurement needs to manage the costs out but also to optimize the value in. To play that role we need to redefine what we mean by optimization. For too long, optimization has been delegated to the agencies and other measurement vendors or technology vendors. Optimization is treated like a measurement tactic when it should be so much more.
Optimization is not the negative process of optimizing through a budget – cutting scope, cutting fees, getting more for less from your external suppliers – but about committing to a process – I might even like to call it a philosophy – of continuous, incremental improvement.
It’s not looking to buy the cheapest or get the biggest volume commodity for a fixed budget, it’s looking at marketing spend as an investment. It’s about scrutinizing it continuously, and then making decisions, based on analysis, for what that money could be doing differently to produce a better result.
Optimization as a strategy
At a strategic level optimization means examining what works, what needs to get better, taking best practice and trying to extend that into even better practice across the whole function.
The goal is not to be as good as but to find a competitive edge, to find your category advantage and leave your competitors lagging behind. It’s about looking for opportunities for continuous incremental improvement and finding marginal gains.
To illustrate how improving many small things creates a giant opportunity in media, I want to share the story of Matt Parker who was part of the Great Britain cycling team at the 2012 Olympics in London.
Matt’s job title was ‘Head of Marginal Gains’ and his role was to find the small opportunities to improve the entire team, give them a new edge and scrutinize every single forensic component of the operation. That meant looking at everything from the initial strategy, the selection of the athletes and the condition of the athletes and how they trained, all the way through to the mechanics of the bike, how to make them lighter and faster and more efficient.
Marginal gains. Big wins.
It included how to prepare the team on the day, in the minutes before the race, to ensure they achieved peak performance every time they got in the saddle. Matt spent the years leading up to the Olympics analyzing the microscopic parts of the process, looking for opportunities to optimize, looking for ways to make everything just a little bit better.
Matt knew that all these incremental gains, these small improvements would make the difference between winning and coming second. He was right and in 2012 Team GB won seven of the ten cycling gold medals available.
Marketing procurement leaders can be the ‘Matt Parkers’ for their organizations; the people who scrutinize processes, who bring in best practice, can innovate with partners to create better practice, building a system that can outperform everyone reliably and sustainably every day. It’s about making sure that every dollar is working harder than the next brand and it is a never-ending task because tomorrow you can always find a new improvement to make.
When you do this, you create a virtuous circle: the more money we make, the more we can invest. And the more efficiently it works, the more money we make. That is the spirit of great procurement, rooted in the concept of optimization as a currency.
Internal capabilities and marketing investments
Our advice to brands who are ready to embrace their inner Matt Parker and are keen to start a program of continuous incremental improvement is to follow a simple framework. The journey to optimization lies through three key pillars, Capabilities, Partners and Investments, and this process typically starts with some self-assessments and benchmarking. The answers can be very revealing when you ask your organization questions about how you can make each of these areas better.
Optimization will make you a winner
Optimizing your media operations will give you competitive advantage. Once you’ve got a highly optimized system, you can be confident that when you put money in that system, you’re going to beat your competitors every single day.
From a finance perspective, optimization means you can be confident that investments are working hard, and that procurement has played its role as both the financial guardian and strategic partner for marketing.
Marketing procurement needs to own optimization as a strategic framework. Don’t delegate that task to your agencies. We encourage you to be the guardians of value that are willing to scrutinize the system to find tiny, incremental, marginal gains.
When you add these improvements up, they will deliver competitive category advantage for the brands that we all serve.
It’s time to commit to a strategy of better-quality media for brands and optimize our processes, capabilities and relationships to that single goal. By doing so, we can be an amazing force for better media and create a brighter future for our businesses.
When brands get the media they deserve they grow. And when brands flourish, we all win.
Matt Parker: The King of Optimization
Matt Parker, Head of Marginal Gains for the Great Britain Olympic cycling team, had a team of 15 marginal gain specialists working for him covering areas such as biomechanics to nutrition to physiotherapy.
Together they completed 28 major projects in just two-and-a-half years in preparation for the London Olympics in 2012. Each project delivered marginal improvements on the existing process, each one shaving milliseconds from track times or gave athletes small gains in performance and recovery.
As a result of these marginal gains the GB team dominated the velodrome, winning seven of the available 10 gold medals on the cycle track.
Among the innovations that helped Team GB to glory at the London Olympics were:
Hot pants – heated trousers designed to maintain muscle performance and get athletes ready for action quicker.
The Golden Hour – optimizing recovery levels between the semi-final and finals in order to turn silver medals into gold.
Stickier wheels – Spraying alcohol on bike tires to remove dirt and increase stickiness.
NASA pillows – taking rest and recovery innovations from astronauts
Lighter cranks: Cranks attach the pedals to the axles and Team GB’s were constructed of 180 separate pieces of carbon fiber to save weight.
And that’s before you include the longer term work they did on athlete development.
About the author. Tom Denford is CEO at ID Comms & founder of The Global Media Council
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