Excellence in marketing procurement

Intro| 00:03.20
Welcome to the Procurement Unplugged podcast, the podcast for procurement professionals. Great to have you with us today.

Fabian | 00:11.88
Hello, everyone. I'm very happy to welcome you to a new episode of Procurement Unplugged. Today, I'm very proud to have our first guest from the US, Sarah Scudder, who's a true expert in the procurement of marketing services. So, hello and a warm welcome from our side, Sarah.

Sarah | 00:32.76
Thank you. Honored to be the first U.S. guest representing. I'm joining from the San Francisco Bay Area. So beautiful, warm, sunny weather today.

Fabian | 00:45.01
Thank you. Sarah, I mean, it's always a funny story, a great story, how people ended up in procurement. So what was kind of your story?

From Fashion Dreams to Procurement: Sarah's Career Pivot

Sarah | 00:57.38
So my story was very random and unplanned, I think, as is most. who wind up in procurement. So I was planning to actually go into the fashion industry. I did runway modeling in high school and fell in love with the fashion industry and had thought that someday I actually wanted to own my own runway production company. So my plan was after college, I wanted to go work for a company that produced fashion shows either here in the US or globally. get some experience, make my connections, and then eventually I was planning to open my own company.

My senior year in college, I had just finished serving as president of my sorority, which is Alpha Gamma Delta, and I figured I've got one semester left, kind of my last hurrah. I decided to co-chair our big fundraising event, which was called Lip Jam, and the purpose was to raise money for our philanthropy, which was diabetes. The goal was that all of the fraternity chapters would do a fundraiser, we raise money, we donate it to national, and then we would make a significant contribution to diabetes research. So myself and one of my other sorority sisters decided we were going to take it on and coordinate the event.

Well, I had a full class load. I was a double major, had a minor, and I had never had ever had experience. procuring marketing related services and goods. So when we started jumping into all the planning for the event, I decided to hire a local company in Sonoma County Wine Country, which is where I went to school, to take care of sourcing and procuring everything marketing related for our event.

So that included all of our media, all of our printed materials, all of our promo and swag, all of our apparel. And after the event, which was a huge success, we had raised more than any other event before, which was so awesome. The company that I had hired to do all of this offered me a job.

Now, I was still in college. This was completely opposite of the fashion industry, but I decided to spend a little more time with the team. I had worked with them for several months, so I had gotten to know their culture and how their business ran. And I actually decided to take the opportunity. And the reason I did is I am very entrepreneurial. I love technology. I love marketing. And I figured that, you know, someday I may want to have my own business or be able to build out a team at a larger company.

And what better way to do that than getting in at a very, very small company and learning all aspects of the business. So right after I graduated, I started at this local company at the time was called Golden Pacific Systems. And that was my entry into the marketing procurement world.

Fabian | 04:06.02
Wow. I think that's certainly another like truly unique and amazing story how to end up in procurement. So, I mean, you mentioned in your first very interference with procurement that you like already had to take it. different types of marketing services like printing, branding, PR and so on.

I mean, first and foremost, what do you think is so different between traditional and materials procurement and marketing procurement? And then my second question would be, what are the differences within marketing? Because many people just think of marketing service procurement, but I think within marketing, there are also huge, huge differences, right?

The Unique Challenges of Marketing Procurement

Sarah | 04:45.30
Yeah, so I'll start with why I think marketing procurement is so different and unique than any other procurement category. So marketing procurement is often done on behalf of the marketing team. And people in marketing are very sales and revenue generation focused. They are not focused on cost savings and cost reduction.

So when I'm the chief marketing officer or running a marketing team, I'm given my budget for the year. That is the budget that I have. And I'm not constantly going out trying to figure out how I can cut my costs and cut the amount of money that I'm spending. I have my budget and that's what I'm going to use for the year. So marketing procurement is not focused on cost reduction and cost savings. And historically, that is what procurement professionals do. They will come in and really focus on how to drive costs out of the spend category or out of a program.

Marketing procurement is really focused on innovation and value add. How can what it is that we're procuring help build the brand of the company? How can it better the customer experience? And how can it increase sales? So it's not about cost. It's about revenue generation and growing the bottom line.

Fabian | 06:08.40
I think that's a super interesting topic, what you're saying, because I think, like, usually the procurement guys are only seen as the bad guys coming in for the cost savings and so on. But actually, the role within marketing, what you just described, is completely different because, all of a sudden, procurement becomes a valuable driver. I think, in the collaboration with procurement, you need to understand that you need to look beyond your budget and recognize the value you can encapsulate from a proper procurement process. So, I think that's a fundamental point — in that regard, procurement is a value driver. Yeah, marketing procurement is all about going out.

Sarah | 06:50.36
Studying the market, finding new, creative, innovative solutions, new ways of doing things, and bringing that back to the marketing team so they can assess and determine if that's something that's going to benefit the organization.

And I think it's so, so important if you are in marketing procurement to remove cost savings or cost reductions completely out of your vocabulary. It shouldn't be something that comes up in meetings or comes up in presentations.

Now, it can be the byproduct of coming and finding an innovative solution, a solution that adds value and provides automation, but you do not want that to be the leading factor or force when you're meeting with stakeholders and trying to get alignment and do your internal sales process. So just completely different mindset.

I will say that the marketing spend is often in the top three biggest spend categories at a company. So it is a significant spend. And one of the things that I'm seeing a big shift in the market in the last couple years is companies creating marketing procurement positions for the very first time. So often, historically, somebody in procurement would be assigned marketing.

Marketing wants nothing to do with procurement. Procurement ignores the marketing spend completely and just is going out and focusing on their other categories. But now companies are seeing how much money they're spending on marketing, and they're actually creating marketing procurement roles where the person actually sits on the marketing and the procurement team.

So it's a hybrid position, which is really, really focused on collaboration. And I see companies that do that well are having pretty incredible results with putting in contracts and innovating and working with suppliers. And as a byproduct, saving time and money.

Fabian | 08:52.47
Yeah, I mean, like you mentioned, a lot of interesting things, like the position of the category buyer for marketing services, but also how has it been changing over the years? I mean, you've been for quite a while in the marketing procurement world. What do you think are the three main changes over the last 10 years?

Key Buckets within Marketing Procurement

Sarah | 09:14.59
Yeah, and before I address that question, you had also asked me what the different major buckets within marketing procurement are. I want to make sure that I touch on that for the listener. So, there are a few major buckets that fall within marketing procurement. The first, and what's historically been the largest, is media spend — that's what a company is spending on commercials and advertising. Then, the second is going to be what I call digital marketing.

So, things like SEO, things like paid ads. Then you’ve got your agency and creative spend, so when you’re going out and working with firms to help with the creative process. And then you have something which is really, really fast-growing and is often now becoming number one or two, and that is called Martech. Martech means marketing technology, and there has been a huge, huge surge of new companies creating marketing procurement technology.

So, the landscape has grown substantially in the last few years regarding how many different MarTech platforms are available in the market. But that's actually the procurement of marketing technology. So, a lot of times now, people in a marketing procurement role are kind of like IT sourcing professionals. They’re spending a significant amount of their time actually buying technology that the marketing team is going to use.

So, it’s a really, really important focus and a significant part of that category. And then you’ve got the other two, which is where I have spent a lot of my career, and that is in the print and packaging space. So, while some people may think print is dead, print is dying, and nobody prints anymore, print is still a significant spend for many companies. We're talking hundreds of millions of dollars in some cases.

And then you've got another bucket, which is fast-growing. If you are a company that's selling products to the end consumer, that is packaging. With the rise of COVID and the shift in how people are living and consuming, people are spending so much more money now online instead of going into brick-and-mortar stores. As we consume more online, that means companies have to buy more packaging.

And often, marketing is heavily involved in packaging because it's a really important part of the branding process. How your packaging looks and feels can make or break whether your product is successful. So, those are some of the major buckets that fall within marketing procurement that I think are just important to note.

Fabian | 12:01.37
Yeah, I think that was a super interesting kind of classification of the different buckets. But, given that you have experience in that topic, do you really think that in the first categories you mentioned, like media spend and digital marketing, procurement can drive value here? Or would you say procurement could completely disregard those topics and only focus on, let’s say, the creative agency spend, the MarTech, and the printing and packaging?

Yeah, so I think marketing procurement...

Sarah | 12:41.02
Add significant value in the media and advertising bucket because part of that involves going out and helping source and procure talent—finding the right partners to help create and execute the media. Additionally, procurement works with marketing to ensure that they have the right KPIs (key performance indicators) in place to make sure that the right talent and the right timelines are established. Media partners should be rewarded when top talent is assigned to the account and when timelines are met; conversely, when timelines are not met, there need to be repercussions and processes in place.

So, I think from an execution standpoint, procurement can really help and add value. Then, negotiating contracts with agencies—again, procurement may not be making the final decision—but once the agency or firm has been selected, procurement can add a lot of value in ensuring that a good, healthy contract is in place. This includes having backup contingency plans if something goes awry. You don’t want your marketing team stuck with no secondary or tertiary solutions.

Fabian | 13:56.77
Okay. No, I mean, that makes completely sense. And do you think in those categories there are already solutions in place or people still need to operate very manually because the… the likes of the big S&Ps or other systems, they're not really catering to marketers, to marketing procurement professionals.

Niche Solutions vs. Large Procurement Systems

Sarah | 14:16.96
Yeah, so I think the more old-school Ariba, Oracle-type solutions do not work well for marketing procurement. You’ll find that at most organizations, they’re doing something else and not using those solutions. They may be issuing a purchase order, but that’s not the solution for the exploratory and sourcing process.

So, you’ll find that more and more niche category solutions are being developed and implemented, and there are many being built specifically for marketing procurement. I mentioned MarTech as one of the fastest-growing categories within marketing, and that’s because there are so many niche category solutions emerging.

One of the ways procurement professionals can add value is by going out, looking at those technology-driven solutions, and figuring out what will make the most sense for your marketing team. Then, they can implement something that will automate a lot of the manual work being done via phone, email, or spreadsheet. I do think there is potential for automation to be leveraged and value to be added by implementing very niche technology for the marketing team. Again, this will not be a company-wide ERP-type solution but something very specific and niche that the marketing team will use.

Fabian | 15:43.86
So you don't believe in a kind of big kind of procurement solution, which is marketing, rather believe in a best approach. Yeah,

Sarah | 15:55.22
So I'm a very big believer in niche category solutions are really what's going to drive value and meet the needs of the businesses. One solution can't solve every category spend need and serve every single stakeholder. So I think there's a lot of value in going out and finding niche solutions that make sense for that team or that department.

And then the key is having some central way to integrate them all to centralize purchase orders, to centralize invoicing, and to centralize the data piece. I mean, data is so, so important. You need to have clean, good data so marketing can assess and look at how they're spending their money and pivot and make tweaks as quickly as possible.

Fabian | 16:41.94
I mean, talking about niche solutions, you mentioned earlier that your expertise comes in with regards to the printing and packaging. Maybe you can tell our listeners a bit more about the key challenges with regards to the procurement of printing and packaging.

Sarah | 16:57.18
Yeah, so about three years ago, I joined a startup called Real Sourcing Network. We go by RSN. I run our growth strategy and marketing. And we're a technology provider that has a very niche sourcing solution for print and packaging. So some of the big challenges that I've seen in this particular space is one, old school thinking and old school mindset. I've been buying my print from the same manufacturer for 20 years. They do a great job. I know the owner. I know their kids. I know their family.

So I have no interest in changing or looking at something new. So there's a lot of legacy, very, very long-term relationships between a printer and their clients. And that's a challenge because in the last 20 years, there's been significant advancements and changes in the industry. And if you as a company are not looking at what's new and what's innovative, your competitors will be, and it could cause them to significantly pass you by. And you can lose revenue and you can lose clients from it. So that's the big challenge is the old school mindset, people not really being open to look at or even consider something new for this category.

Another challenge is it's tail spent. It's something that people don't really think about. If you spend a billion dollars on media and your print spend is $5 million, where are you going to spend your time and resources? On the billion dollars. And so because and packaging often make up a much smaller percentage of the total spend category, it's ignored.

So whatever the company's been doing, they just keep doing. Instead of going and spending some time and resources looking at what they're buying, is it efficient? Is there a better way to do that? So those are two just things that we see constantly coming up over and over again. On the plus side. I think sustainability is something that's really become a focus point this year. I think because of COVID, so many people are home and they're seeing how much waste that they're generating.

And you're seeing a lot of consumers, me included. I'll take pictures. If somebody sends me really wasteful packaging, I'll post it online. I'll tag the company. You know, was it necessary for you to ship this pen in a refrigerator size box? And so. Because that consumers are really kind of posting and demanding and talking about it, companies, some companies are saying, yeah, we probably need to look at a different solution. So one of the things that my team and I are really focused on is sustainable packaging.

So we help companies source and procure print. We also help companies source and procure packaging. So we've made...

Fabian | 19:57.23
What are the key topics for you? What are the key points for you to really enforce sustainable packaging?

Sarah | 20:05.89
Yeah. So the first thing is a company needs to have executive buy-in if they're going to change to sustainable packaging. And a manager at a company is not going to be able to drive the change. It has to be an executive leadership decision. The company is going to invest in sustainable packaging, and they're going to assign the appropriate resources to do that. It's really, really important. And often this is driven by marketing. So the chief marketing officer says, we want sustainable packaging.

We're going to incorporate it in all of our messaging. We're going to put it on our website. We're going to print it on everything because we feel we're going to get new consumers because of it. and we're going to be able to satisfy our existing consumers.

So really, really important part to get that buy-in and have it be driven by marketing so they understand the value of doing it or it won't go very far. So once a company comes to the realization that they want to consider a change and looking at sustainable packaging, it's really important to look at the weight of your packaging and making sure that your packaging, your products still get to the consumer without being damaged.

So the most unsustainable thing you can do is have your product be damaged in transport, because then you have to reship a new product and buy and use more packaging material. So you want to make sure that your product is getting to the consumer without being damaged. Really, really important.

You also want to make sure you're minimizing returns, again, because that's requiring extra packaging and impacting more of the carbon imprint. So after those two things are under control, minimizing returns, getting your product to the consumer without being damaged, you want to look at how you can minimize the weight of your packaging. Lighter packaging is more sustainable and lighter packaging is cheaper because you're lowering your transit cost.

So if I look at my hydro flask here, which I use obsessively, and if there's a way that I could reduce the weight of the packaging that this gets sent out in by 50%, imagine what that's going to do from a freight and transit perspective. It's going to significantly reduce costs that are associated with transporting that product. So those are some. key important things that brands need to look at.

The other thing from a messaging perspective is you want to very clearly print on your packaging how a consumer is supposed to dispose of it. So one of the challenges is you get packaging, you remove your product, then how do you know what to do with it? Should it be thrown in the trash? Does it go in the recycling? Is it something that's biodegradable? and should go in your compostable.

So there's all these different factors where even somebody like me who's in the packaging industry, a lot of times I don't even know how to dispose of packaging. So make sure you put really clear, simple instructions for your consumer about what they should do with it once the product is removed.

Fabian | 23:38.63
I think that's a kind of very true statement here because certainly sustainability is our global mega trend that we should all focus on and I think that's a clear incorporation and description how to execute on it with regards to the procurement of packaging. And here I already come also to my last question. I mean you've been in the procurement of marketing for quite a while.

How do you see the future? I mean what kind of trends apart from the sustainability topic we just touched upon you see for the future?

Future Trends in Marketing Procurement

Sarah | 24:14.70
Yeah, so I'll talk about packaging in particular and then I'll answer that also more generally in regards to marketing procurement. So from packaging we're going to see many more innovations. coming into the market in the next couple of years that are going to be completely biodegradable. Meaning once the product is removed, your packaging could go into combos and will completely disintegrate in a certain number of days or weeks. I think we're going to see more packaging become recyclable.

So instead of having to throw it away, I think more of it will be able to be put in the recycling bin. And I think we're going to see companies really minimize the amount of packaging that they're using. So instead of filling a box with air pillows or the bubbles or other materials that are used, I think we're going to see new packaging designed that more closely fits the size of the product being shipped. So excess packaging material is not needed.

In regards to marketing procurement in general, I think we're going to see a big shift to sustainability in all aspects of marketing procurement. So that means more sustainability in regards to media and agency work, more sustainability as it relates to print, logistics, transportation, more sustainability in working with agencies and media partners. And then I think we're going to see significant amounts of marketing budgets be dedicated to technology.

There are still companies where they're not spending a significant amount on tech, but I think that's going to change because there's so much that you can do online with data and analytics and getting good information on your consumers. I think that's going to be the fastest spend and growth area. from a marketing procurement standpoint. So if you're interested in getting into marketing procurement, get familiar with IT procurement.

Go counter people who are buying technology and other categories and learn how they're sourcing it, what are some of the important legal ramifications, what are some terms and conditions they need to know about that go in the contracts, because that's going to be a huge part of people that are involved in marketing procurement moving forward.

Fabian | 26:48.06
Thanks a lot. That was a very interesting closing statement. And that means for all kind of marketing people to really focus on sustainability and technology. And the bottom line, kind of what I could hear from your speech is really driving innovation in all kind of regards, no matter whether it's packaging, but also with regards to other verticals. Thanks a lot. It was a truly interesting talk. Thanks for the time. It was a pleasure having you here.

Sarah | 27:17.22
Thanks for having me.

Final | 27:18.32
This was the Procurement Unplugged podcast. Thanks for tuning in today. For more podcasts and expert content, visit us at procurementunplugged.com.