Speaking at Marketing Week Live today (25 June) Thomas Holzapel, head of marketing procurement at Deutsche Telekom, said the two divisions were focusing on both cost cutting and value building in the face of declining revenues from core parts of the business such as mobile communications and TV services.
New products and a focus on emerging categories such as healthcare and cloud-based products are being developed to kickstart growth, meaning marketing is under greater pressure to hit the organisation’s wider objectives. The shift has already led to budgets being slashed to pick the “low hanging fruit” of cost cutting, forcing the company’s senior marketers to be smarter at putting a marketing spin on how procurement can achieve new goals.
Members of the company’s marketing procurement team are working more closely with marketers at various stages of projects to ensure its role sits outside of just bottom line savings, risk reduction, compliance and administration. Agency briefings and campaign workshops are two areas where members of the procurement team are being invited to attend in the hope of developing metrics and goals more closely aligned with the marketing department.
Holzapel said the developments are reflective of a tension “very specific” to marketing departments everywhere where procurement has not been full accepted by board level marketers. The tension between procurement and “other areas of the business doesn’t exist”, he adds, and is “something that has become a natural part of the way other departments function”.
Procurement has become a hot topic for the industry as advertisers debate its role in a landscape becoming increasingly driven by data and the need to adopt cheaper, more targeted strategies. Marketing is losing its role in securing agreements to procurement, according to the World Federation Advertisers, which found more than half of its members (51 per cent) have ceded the negotiations and implementation of contracts to procurement over the last decade.
“At Deutsche Telekom my role is about team work and collaboration. Procurement in most large companies is involved in the marketing spend but more needs to be done to bring clarity to how it takes on a strategic role where metrics are aligned to the growth strategies of our organisations”, said Holzapel.
“Procurement in marketing is much more than just cost cutting and is becoming increasingly about strategic sourcing. Discussions need to be had between CMOs and CFOs to deliver that strategic focus. It surprises me how little this happens in other big global companies. It’s about both marketing and procurement understanding each other’s goals so that they can work toward one objective.”
Holzapel also had a word of caution for agencies that feel threatened by improving relationships between the departments, urging them to “relax” and not see procurement as a “third party”.
He said: “Procurement is a different part of the business but that doesn’t mean agencies should treat them as separate entity when dealing with clients. We are measured on savings and agencies need to spend time understanding how they can deliver those savings. Discussions need to be had around those kind of metrics rather than hourly rates and prices.