Transforming Value and Creative Thinking in the Emerging Period of Influence and Network Investment
Bruno Gralpois, Co-Founder & Principal, Marketing Mania Solutions*, Author, Speaker, Thought Stimulator, Marketing-Agency Luminary, Innovator.
Marketing experts converge annually at conferences to contemplate, scrutinize, and discuss trends redefining the industry. The advertising realm is undergoing a profound evolution—one I deem the most momentous in many decades—as media, digital, and consumer channels multiply, and technology evolves. AI is the buzzword captivating everyone's attention.
Leading multinational brands heavily depend on an expansive network of agencies in various disciplines—creative, media, activation, retail, digital, social, etc.—to drive growth, enhance brand value, and meet aggressive revenue targets. Given the crucial role of these strategic partnerships and persistent financial pressures, procurement professionals are persistently challenged to ensure these resources are optimally positioned for success and effectively utilized by marketing stakeholders.
However, even though securing skilled personnel is essential, I've discovered that establishing harmonious relationships between procurement teams, marketing teams, and external advertising agencies is equally crucial to maximize organizational value.
Insights from a Procurement Gathering
At ProcureCon Marketing in Los Angeles in November, I was honored to participate in a panel of procurement experts discussing the ongoing challenge of fostering innovation while maintaining cost efficiency. We pondered fundamental questions such as:
• How does a solid, trust-based partnership with your internal marketing team, procurement team, and outsourced agency partners reinforce your objectives?
• How have recent economic conditions affected business relationships? Are we adeptly balancing short-term and long-term priorities? How can we optimize efficiencies without compromising quality and client satisfaction?
• What is the future of agency compensation and pricing structures, considering AI progress?
Here are the key takeaways I derived from this panel and the conference in general.
1. Procurement and marketing teams are bridging the gap.
We're now at a critical juncture in marketing procurement. Procurement's reputation, typically reporting to Finance, is synonymous with highly analytical, detail-oriented, risk-averse, and somewhat introverted specialists. However, when combined with marketing's energized, dynamic environment, these two teams can generate strategically-focused functions, empowering procurement professionals to prioritize growth and innovatively support their marketing stakeholders and agency partners.
From my perspective, the enthusiasm and eagerness of procurement professionals to learn and apply innovative practices from procurement were extraordinary in 2024. Brands realized that accomplishing their objectives necessitated the close collaboration of their procurement colleagues to enable agencies to perform at their maximum potential without breaking budgetary constraints. Both parties should strive to find common ground regarding defining value from the work they produce and pricing agency services fairly.
2. Agencies and procurement teams are embracing AI.
The advancement of AI and its applications across various marketing functions is a hot topic. Agencies are investing in AI tools to increase efficiency and improve productivity. These tools can assist in idea generation, research, scripting detailed briefs, testing concepts, and creating advertising assets. As a brand advertiser, consider how you can support your agency partners' efforts while adhering to your company's AI usage guidelines.
Obviously, many procurement organizations are exploring how these agency benefits can be extended to marketing teams, leading to improved performance or reduced resource allocations. We're also witnessing novel ways to leverage AI for data management and business analytics. As a result, you can make more informed and timely decisions, manage budgets more effectively, and maximize your agency partners' valuable but limited resources. New opportunities derived from AI can also be applied to cost benchmarking, scope-of-work planning, and management, client-agency performance evaluations, and countless other key marketing functions supported by procurement. Encourage tech vendors to share their roadmap and test these new capabilities with your team.
3. Agencies might be considering alternative compensation models.
One critical topic discussed at the conference centered on agency compensation. According to a recent study by the World Federation of Advertisers and MediaSense, "three-quarters of multinational brands are looking to modify their agency remuneration model in the next three years" due to a desire for improved alignment with business outcomes, heightened accountability, and better access to talent.
These are desirable objectives. Will AI result in reduced agency fees? Will agencies' long-term investments in AI research and training personnel will boost overhead expenses, offsetting short-term efficiency gains? Is AI promoting a shift towards more transparent output or outcome-based pricing models? The procurement community appears tentatively optimistic, as 58% of brand advertisers anticipate paying less when AI is implemented.
The Impact for Procurement Leaders
Numerous marketing procurement professionals attend industry events to share insights, particularly in emerging innovation arenas. To promote greater transparency from agent partners, your procurement team can lead by openly sharing its goals and initial achievements. Additionally, if you aim for improved efficiency, consider collaborating to position your organization as a true business partner while maximizing shared benefits from innovative ideas.
We have a unique opportunity to synchronize with agencies and procurement leaders in defining the value their involvement is intended to create. I urge you to revisit compensation agreements to ensure they reward quality and effective output, rather than just time and effort. Encourage responsible AI usage in marketing procurement as well.
In the central position of promoting partnerships, marketing procurement is now an optimal time to enhance the exchange of benefits between advertisers and their associated agencies. I'm convinced that companies that convert marketing procurement into a key strategic resource and a catalyst for value generation will be the ones to prosper.
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Bruno Gralpois, a renowned figure in the marketing industry, served as the Co-Founder & Principal of Marketing Mania Solutions and contributed significantly to various discussions on marketing trends. At ProcureCon Marketing in Los Angeles, he shared insights on the importance of bridging the gap between procurement and marketing teams and the role of AI in agency compensation.
