The world’s largest advertiser, Procter & Gamble, has always been used as bit of a bellwether for the health of the marketing and advertising sector.
This is no wonder. Spending upwards of $10bn every year on advertising means that depending if P&G swells or reduces its coffers, advertising agencies and marketers will either run for the hills or reach for the champagne as a result. Even the budget remaining static is enough to make a few headlines.
Last month, however, the CEO of P&G issued a statement which would have sent a chill down the spine of marketing agencies and those who work in the industry. It may also, ultimately, lead to a reduced opportunuity for procurement executives to tackle a category of spend widely recognised as offering a major opportunity for many companies.
An article on Business Insider, quotes CEO Robert McDonald saying that the growth in advertising will slow and that alternative advertising opportunities are making him sit up and take notice. "One example is our Old Spice campaign, where we had 1.8 billion free impressions and there are many other examples I can cite from all over the world," he said, rather ominously. The company also announced a round of redundancies, which will include some from marketing.
So, what has all of this got to do with procurement?
Well, at the most simple, it’s interesting to see how the CEO of the world’s largest advertiser is adament that there is more value to be had from his marketing dollars. He has recognised - correctly - that not every dollar spent has a return. This is a useful negotiating tool for CPOs trying to gain traction over a notoriously difficult category of spend, because procurement can point to a number of tools at its disposal that could help reduce the spend without impacting service.
How powerful would it be to put the fact that the CEO of P&G is concerned about the amount his organisation wastes in marketing in front of your head of marketing, together with an offer to help. Procurement may not have all the answers, but it certainly has some of them.
Second, McDonald’s recognition of the effectiveness of new marketing and advertising channels such as digital (social media outlets like Facebook and YouTube) means that CPOs should be swotting up on the area to see what the rules of the game are and how companies are achieving a return on their investment. It’s a new and developing area, but one which isn’t going away.
Marketing and procurement haven’t always been the closest of bed fellows. But as more and more organisations look at the size of their marketing budgets, weigh up the return that they bring and begin to look for ways of closing the gap; procurement should be ready and waiting.
David Rae is editor of Procurement Leaders. To subscribe to the magazine, click here.