Is supplier management the way to cut your marketing budget?

The American comedian Bill Hicks always hated marketers. In fact, he once said, “If you’re in marketing, do me a favour: go kill yourself.” That’s a pretty strong statement, but many company executives are beginning to think something similar. As budgets begin to squeeze they’re aksing marketing departments to justify their existence. The problem for marketers is that their value is hard to document. So what are marketing managers doing to ensure they keep their jobs?

For many marketing departments, the problem often boils down to justifying marketing expenses. The production department can show exactly how much money a new IT system generated over a period of months. A sales department can translate time on the ground to orders in the bag. But marketing doesn’t have this luxury – usually, there’s not clear line between marketing money spent and company profits.

This means top management often sees no incentive to invest heavily in marketing, especially during a financial squeeze. And as anyone in marketing will tell you, that’s just the moment you need to step up your marketing efforts.

How many suppliers are you juggling?
So marketeers are increasingly looking to cut costs. And right now, one of the moment’s biggest cost-cutting areas is purchasing. Until recently, marketing departments have been balancing their agencies and freelancers depending on the project in hand. The question has been: who helped with the last brochure and can they help with this one?

But this approach can prove costly in the long term. Each new job requires a new contract, budget negotiation and briefing – and often each supplier is handled by a different person in the marketing department. You end up with many different suppliers with varying levels of knowledge about your company and little overview of which agency knows about which product, service or project.

To combat this, marketing deparments are looking to long-term service agreements with fewer, but more highly skilled, suppliers. Other departments have been doing this for years. They’ve invested in centralised supplier contracts to ensure more cost-effective, better quality services. But it’s a relatively new approach for marketing departments.

Do you need to refresh your purchasing plan?
Companies such as FLSmidth and Sennheiser Communications have recently entered supplier agreements with Eye for Image, a Copenhagen-based international communications and copywriting agency.

Anja Pellegrin, Marketing Coordinator at Sennheiser Communications, says: "The agreement with Eye for Image has freed up a lot of time for us – and that means we can concentrate on developing our creative strategies. I don't have to select and brief a supplier for each new task. Instead, I simply ask Eye for Image and know I don't have to negotiate a new agreement each time. This is also making it easier to document costs and savings to top management."

According to David Hoskin, Eye for Image’s managing partner, the supplier agreement is a growing trend. “More of our customers are looking to solidify their relationship with us in this way,” he says. “It allows them to build up trust over a number of jobs until we’re viewed as an extension to the marketing department. We can be called upon when things get busy – and guarantee to always have writers available to get the job done on time. Also, with this level of trust and insight into the client, we’re able to support other agencies who offer a unique service on a project but don’t know the client so well.”

Many marketing departments are even enlisting the help of the true experts – the procurement department – to make sure they get the perfect deal. Procurement are adept at reaching favourable agreements, and even dangle company-wide contracts covering all divisions infront of suppliers to help negotiate a better rate.

This gives every department access to a single supplier who knows their company’s business and tone of voice – for a much lower cost than they could achieve negotiating each deal individually. And because the supplier knows the client so well, it ensures a consistent style in every customer-facing communication the company does.

Next time top management asks you to justify your existence, wouldn’t it be nice if you could tell them that you’ve got a better service for less money?