Procurement takes the lead post-pandemic

Credit: Scott Graham
Credit: Scott Graham

As the pandemic created the need for change, procurement took the spotlight in contract negotiations.

The coronavirus forced sudden, swift and sweeping change. Customers said goodbye to bricks and mortar and embraced virtual. After more than a year of lockdowns and social distancing, online shopping has taken over as the favorite way to spend.

This transition triggered another: Marketers are looking to re-frame relationships with service providers to shrink costs and guarantee digital expertise.

FirmDecisions sat down with 100 procurement and sourcing leaders from organizations across North America that spend between $100 million and $500 million on marketing. They spanned industries, tenure and seniority — and offered valuable insight into the state of procurement marketing post-pandemic. 

Marketing leaders are eliminating the unknown by getting all the cards on the table, scrutinizing agency contracts and optimizing their services.

COVID-19’s most common side effect: change

The pandemic shifted consumer habits and pushed rapid marketing response. These changes have caused a ripple effect. After a worldwide public health emergency, many brands are reconsidering their relationship with outsourced marketing.

More than a quarter of procurement leaders told us they are prioritizing SEO and web development within the next six months. And 27% said they’ll pursue programmatic advertising in the same timeframe. 

Given these shifts, what do agency and brand relationships look like after COVID-19? Forty-three percent of respondents said the pandemic drove procurement teams to change ongoing relationships with agencies. Many brands reduced or eliminated their work with agencies to cut costs. 

Of these, 41% said they scaled back experiential services — the category most affected by pandemic-related downsizing. Shopper (39%), creative (33%) and sponsorship (31%) also suffered cuts.But other organizations expanded their work with agencies, while some picked new agencies at new costs. 

The pandemic pushed procurement from implementation to strategy

As the pandemic created the need for change, procurement took the spotlight in contract negotiations. 

Organizations are asking procurement teams to drive strategy. Typically, procurement pros step up only after contracts are set to implement change. But our data shows that brands are involving procurement teams earlier in the process, creating an enormous opportunity for marketing and procurement to drive value.

Nearly 45% of brands said their CFOs renegotiated contracts, but 39% said client procurement teams handled the process as well. After renegotiations, both client procurement (42%) and client marketing (40%) implemented changes.

These changes aren’t stopping. Almost half of procurement leaders surveyed hope to reconsider their communications and advertising abilities in the next year. Another 34% plan to reconsider these capabilities in the more distant future.

The pandemic gave way to an urgency among brands to better understand agency relationships, especially as consumers continue to shift to digital channels. 

Contract reviews ensure a brand’s partners make good on their promises. A commercial audit will flag roadblocks like, are your agencies underperforming? Do your contracts expose you to risk? Can your partnership be stronger? 

Information can guarantee the success of commercial partnerships. 

Christine Moore is managing director, North America at FirmDecisions.

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