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By Christine Moore
How globalization can help marketing procurement drive efficiencies while maintaining or increasing creative quality, team collaboration and innovation.
International Agency Partners
By doing the upfront research on potential international agency partners, procurement can establish great connections with the agencies but also be seen as a valued partner to marketing.
By Christine Moore
2023 so far has been volatile with clients having different strategies around increasing or decreasing marketing spend due to high inflation, low consumer confidence and the rumored inevitable recession.
We are also seeing a strong focus across the advertisers to better control and impact marketing spend through deep analysis on what impacts the spend, like cost of service, increased scope of work and additional Martech services like new platforms, trading access and data among other things.
So, what can marketing procurement teams do to lower cost of service while maintaining or increasing creative quality in the current environment?
As analytical and resource-full professionals, we tend to look for efficiencies both through better organization and execution of services as well as the arbitrage that the world’s currencies provide us with. Many companies utilize international firms for these reasons.
We don’t have to look far to find markets very similar to the US from a quality, fame, innovation and capabilities standpoint. At Raus Global, we reviewed a few of the top creative markets to see how marketing procurement can take advantage of cost efficiencies while maintaining or increasing creative quality, collaboration and innovation.
According to a United Nations report from 2021, creatives such as artists, musicians, and filmmakers are driving growth in emerging economies. So much so that the UN has estimated that the creative economy will reach a global valuation of $985 billion by this year (2023) and could represent 10% of the world’s GDP before 2030.
Toronto in Canada claimed the fifth spot for its high number of creative classes and workshops (83), and its world happiness ranking by country (15). According to recent calculations (Statista.com), total media advertising revenue in Canada in 2020 amounted to a little over 10.15 billion U.S. dollars. By 2023 this figure is expected to reach 12.6 billion dollars. The medium with the highest investment this year will be digital, at 7.4 billion U.S. dollars, while TV will see 2.4 billion of the total ad revenue.
We met with one of the Canadian power houses in creativity – Diamond, to discuss how this company has taken advantage of the country’s creative reputation and the cost advantage it offers to clients from around the world.
Diamond is one of the largest independent, full service Canadian creative communications agencies. Diamond offers clients both a vertical and horizontal model – the best of traditional brand building but also more specialized expertise in content, influencer, partnerships and more. They are known for their creativity and breakthrough work driving business results.
Josh Diamond, co-founder and current partner at the agency says they have seen a large increase in the number of pitches from US and other international clients in 2022 and 2023. He credits the level of talent in the market as well as the much more diverse talent pool in Canada.
Another important factor is the large discount on the Canadian currency which offers 30% discount on average as well as limited difference in time-zones.
With many US clients embracing remote work post pandemic, their geographic requirement for marketing agencies have been replaced with borderless access to the best and competitively priced talent.
Many of the top independent agencies in Canada, such as Diamond, Zulu and ReThink have also opened offices in the US. Josh explains that it is to be able to meet different needs ranging from fully remote, to hybrid to fully local.
In terms of working with Marketing procurement, the team at Diamond attended Procurecon Marketing in Palm Beach, CA last year. It is Josh’s view that agencies need to better understand what all stakeholders – not only marketing – are looking for in a successful business relationship. By attending Procurecon, his team gained insight into the needs, priorities and challenges of marketing procurement, operations and finance.
Another market that has become a creative powerhouse is Turkey.
According to the British Council, The Turkish economy has enjoyed strong growth, fueled by trade and foreign investment. According to the United Nations Development Programme (UNDP) Creative Economy report, amongst the world’s emerging markets, Turkey is one of the top three performers in exporting creative services including Art & Crafts, Publishing, Performing Arts and Visual Arts. Turkey is ranked #37 on the 50 Most Innovative Countries in 2022, issued by WIPO Global Innovation Index).
Turkey is home to six unicorns (unicorn is a privately held startup that has a valuation of over US$1 billion), fostered by its development of a Megatech corridor through Istanbul to Izmir. The Turkish Lira is also at an all-time low and the time zone works well with both Europe and Asia.
Since the pandemic, Noa-Hub, a leading with a network of creative thinkers and problem-solvers has seen an explosive growth in international business – from 20% pre-pandemic to 70% post pandemic business originating from outside Turkey. A lot of the work comes from the UK, western Europe but also US and Latin America. Most of the work is through client referrals.
Melodi Turkili is the founder and CEO. With her team at NOA Hub, she aims to build and accelerate brands and people through strategic creativity and storytelling. With this vision, she has managed to not only work with the largest clients in Turkey but supported them through their international expansion and brand extensions. She says the pandemic helped her connect with clients through video and thereby driving the international project base with limited travel costs.
The team works in hybrid where some meetings and work are handled through video but sometimes the project team travel to work locally with clients. Melodi says it depends on the type of project and execution and each client works differently.
Melodi mostly works with procurement of larger clients. She appreciates that they bring process to the contract, pricing and execution of each project. Melodi laughs and says that her education is in industrial engineering so she appreciates order, consistency and clear direction from the client side.
Another near-shore capability that is often overlooked is Latin America. Chile (#50 on the 50 Most Innovative Countries in 2022) ranks first across the region, thanks to its promising tech sector. To date, it is home to an estimated 8,000 tech companies.
The country also has the highest scale of mobile connectivity in the region. In late 2021, it launched the first 5G network in South America. Following Chile is Brazil (#54), which saw a record number of IPOs in 2021 that were valued at nearly $7 billion.
Colombia and Argentina have emerged as very important countries to hire companies that provide excellent offshoring services in all advertising disciplines due to their cost-benefit relationship between labor cost and talent.
This environment makes marketing procurement very important in this region for many of the same reasons as it is in North America and Europe. However, there are some unique factors in the Latin American region that make it particularly important for marketing procurement teams to focus on for cost optimization while maintaining or increasing creative quality.
Mauricio Sabogal, a seasoned global advertising executive, CEO and Founder of SAB Marketing Connections, a Latin American born advertising agency holding company that groups 20+ independent advertising agencies across the region, thinks that one of the key factors in Latin America is the economic situation.
Many countries in the region have experienced economic challenges in recent years, which has put pressure on marketing budgets. Both agencies and clients have been forced to “do more with less” resulting on more focus on cost optimization, while still maintaining effective and impactful marketing campaigns.
Another factor is the competitive landscape; Latin America is home to many fast-growing markets and emerging economies, which means that companies must compete more fiercely to win customers and gain market share; this has increased the demand for creative and innovative marketing campaigns, thus elevating creativity within the industry.
As we all try to better understand where we can bring value to our company, thinking outside the box is becoming more important than ever.
Marketing procurement have worked hard over the past several years to raise the bar on marketing knowledge and deploying procurement tools to drive value in the supply chain. Now is the time to look outside the common procurement tools of consolidation and fee negotiations and find agency partners who can deliver on the marketing expectations such as creativity, innovation, and collaboration as well as procurement expectations of flawless delivery and collaboration while delivering a cost-effective solution to the client.
By doing the upfront research on potential international agency partners, procurement can establish great connections with the agencies but also be seen as a valued partner to marketing. Areas to review for procurement are first and foremost understanding the scope of services available through the partner.
It is also important to interview current or past clients to understand how the actual projects were delivered. It is key to understand the commercial ways of working of a market as well. While it is important to be open to different commercial settings, but also drive efficiencies for your own bottom line.
Christine Moore is Managing Partner at RAUS Global