David Little is a Marketing Procurement specialist with almost two decades of experience. With a Bachelor of Mechanical Engineering from the University of Strathclyde, David entered procurement sourcing mechanical and electrical engineering hardware. When TrinityP3 founder Darren Woolley first met David, he was procuring ‘point of sale’ refrigeration before being thrown in the deep end of the pool as the Procurement Category Manager for Marketing Services and Sponsorship. Now, almost twenty years after that first encounter and many years of following his progress and achievements in marketing procurement globally, who better to talk about the transformation of procurement and the role of procurement in the transformation of marketing than David Little?
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Transcription:
Darren:
Hi, I’m Darren Woolley, founder and CEO of Trinity P3 Marketing Management Consultancy, and welcome to Managing Marketing, a weekly podcast where we discuss the issues and opportunities facing marketing media and advertising with industry thought leaders and practitioners.
Now, going on almost 20 years ago, I had my first close encounter with the profession, which has gone on to become a colleague, a challenger, and a collaborator. That profession is procurement, particularly marketing procurement, or, as procurement people often refer to it, indirect procurement.
One of the first people I found myself working with has a Bachelor of Mechanical Engineering from the University of Strathclyde. And I say that as you’ll soon hear, to explain his wonderful accent, which he still has.
But when we met, he was procuring point-of-sale refrigeration for a company he worked for, and soon the procurement category manager for marketing services and sponsorship.
In those days, we were known as P3. Still, working with procurement professionals like my guest today made me realize that we would no longer just be working with agencies and their clients. Still, that procurement would become an essential part of the mix, which is why we changed the company name to Trinity P3, the unholy trinity of marketing, procurement and agencies.
It’s now almost 20 years on, and it’s a big thrill for me to introduce today’s guest who’s advanced his career in marketing procurement globally. Who better to talk about the role of procurement in the transformation of marketing than David Little?
Welcome to Managing Marketing, David.
David:
Thanks very much, Darren. I don’t know what to take in there. All two, of course. Thanks for having me, though.
Darren:
Look, I do remember those early days. It’s not quite 20 years. Neither of us are that old that we could be working for 20 years.
But I remember in those days, we used to have some terrific conversations around the place where procurement and marketing found themselves because, in those days, it wasn’t a comfortable relationship.
David:
Not necessarily, no. In fact, it wasn’t a comfortable transition for me necessarily either. I basically came from engineering or the procurement, if you like, as a postgrad, and they put me straight into procuring engineering stuff.
So, I had two years in London doing that, and I came to Australia for quite a revolutionary change, so it didn’t even sit neatly with me.
So, there was a lot of uncertainty on really what the future held for us, for both sides. But they threw me quite clearly in at the deep end, quite quickly in Australia, in the office there.
Darren:
Well, you did take to it like a duck to water. I have to say that you had that calm exterior while underneath the feet were paddling like crazy in the initial days.
David:
I’m not sure anyone’s talked about calm exterior in reference to me, Darren, but that’s very nice of you.
I was certainly very enthusiastic, and it was a very exciting time. Not least the sports sponsorship, then the stuff, I got thrown in at the deep end. The fridges were one thing. I think it was a bit directly million worth of fridges we bought every year. But the specifics around creative agencies and sponsorships was really interesting from day one.
Darren:
Well, one of the things I remember is you were always coming forward, that enthusiasm you talk about, you’d always ask the questions that needed to be asked. You were never backward in coming forward with asking either us as consultants or the agencies the questions that no one else had been asking.
David:
I think there’s two parts of that, Darren. And one of them is you have a luxury start as a buying person, just to say, explain like you would to a five-year-old. Those kind of lines of questioning. And I think you remember the line of question helped me to understand that to both sides.
And it gives you a buffer or sometimes cutting through bullshit sometimes extremely accelerated learning. And I can’t remember the other one I was going to refer to, but that was the most interesting part.
Darren:
Well yeah, I think it’s really important because I’ve seen quite a few procurement people come unstuck because they’re inclined to go into it with, “Well, I’m the procurement professional and this is the way we do it.” Yeah, they’re trying to apply a process to a category that they don’t necessarily understand the drivers of that category.
David:
Most definitely. And also, I think there’s (let’s see), an expectation to perform in front of their own stakeholders, so they don’t want to appear ignorant.
But I think when you zoom out and look at our roles in the organization, oftentimes what you’ll find is we’re a generalist of any particular subject, but a specialist in the process. And that process, for example, finding out what the businesses needs are is almost number one, day one analysis, as you call it, in some parts of procurement.
So, what is it that the company needs from this investment? They use the word investment, of course, quite advisedly there. And then everything you could do can align to that, including being able to challenge the stakeholders on what they are saying does the excelling to what the business needs.
Darren:
It’s a good point about really helping marketers, first of all, determine what it is that they need and want. And then articulating that in the most appropriate way because obviously agencies (from my experience), are very ready to fulfill any need. If you are unclear or lack specificity, agencies will just broaden their remit to try and cover every eventuality, which is not necessarily good procurement or good commercial arrangements.
David:
Are you referring to scope creep or are you talking to with maintaining scope but actually going off track and what they deliver on that scope?
Darren:
Well, defining scope in the first place. If you don’t have a very clear articulation of what scope is, the agencies are happy to respond. But they’ll cast the net as wide as possible and it’s then very hard to pull it back in.
David:
Some might say that’s in their business model or something. You know a lot of what’s included in the retainer much better than I do, Darren, yeah.
You referred to something earlier about aligning with the stakeholders. I was on a webinar before Christmas, recently. It was generic purchasing procurement discussion. And I asked the question … it was consultants, a really, really interesting discussion.
I said, “I like to tell my team, don’t go to the stakeholders and ask them what purchasing can do, what procurement can do for you. Ask them what their business challenges are or what their business goals are.”
And he said, “That’s absolutely correct, but purchasing 2.0, if you want to call it, it would be the next stage, being able to challenge what they say they want and say, this is not aligned to the business’s needs.” And that’s …
So, it’s an interesting line of question. I think the right thing to do is what your business challenges, what you’re trying to achieve. Do the interviews, come back, think about it and say, here’s my strategy and here’s how to deliver both what you are asking for, but what means the most to the business, I should say.
Darren:
So, over the last two decades, what do you think’s been the biggest transformation that you’ve seen in that relationship between procurement and marketing and the agencies?
David:
I would actually ironically say that from the agency side of things, a lot has changed. They are a lot more used to just having it.
So, us being present, us being responsible for the commercial framework, one example. But I would say the paradox is depending which company you work for, depending which market you’re working in, we keep coming back to marketing stakeholders that are not used to working with us. And that’s an evergreen thing. So, we’re — as they say.
Darren:
Yeah. Well, because I would say the procurement in those early days was seen as purely from a sourcing perspective. Most of the responsibility for procurement was around pricing, negotiating savings or identifying savings opportunities.
Whereas there’s been a maturing of the category, and you sort of alluded to it, it is more a commercial partner now. It’s looking at how to make the budget, how to make the investment actually provide a return, isn’t it?
David:
I think to oversimplify it, which I like doing very often and yes, I call it a difference between the 80s and 90s fires and the old guard, let’s say I’m being over simplistic to some extent, but the old guard of people that ended up in purchasing, but people actually chose it as a profession. Maybe that’s high for me, to call it a profession. People actually chose it as their calling. It is a difference in that.
So, we’re seeing a next generation basically, they’re taking more pride in what you do. You talked about price, people basically talking about compliance, what we call, has a pitch being done is a contract in place. We have quite a lot of more recent roles I’ve had, there’s been a lot more focus on ethical commitments and now obviously GDPR is becoming huge. For example, I’m an allocated correspondent on my team to look after that.
But everything was about compliance then cost and then as you know, ride off into the sunset. And most of the good stuff happens after you’ve ridden away in that situation.
Darren:
Now you mentioned earlier getting that engagement from marketers because one of the things that comes up regularly in discussions with procurement is how to build that relationship with the marketing team so that they’re coming to you earlier. There’s nothing worse than the tender has already been issued and now they’re asking procurement to come in and fix it up.
David:
Yeah. There’s a lot of skill, there’s a lot of luck and there’s a lot of people now getting more used to working with the procurement data. The luck part of things might be in terms of which governments you have in place internally.
For example, the trinity many companies work with internally these days is procurement and financial controlling, and the stakeholder. Whether it be from zero based budgeting of whether it just be from other financial aspects. It needs to be looked at that you have an input into what the budget landed out or what is removed from the budget during the year of saving funds.
And the other part is you don’t— there’s so many good stories to tell about this, but you don’t get to inspire people and align them unless you tell them a great story about what you think the vision is.
So, the communication skills from a purchasing point of view. If you sit and wait for something to expire, that’s not going to happen basically.
Darren:
Yeah. Look, and part of that is really understanding the categories you’re working in, isn’t it? There’s a need to really understand those drivers as a procurement person if you’re going to be the commercial partner that adds value to those relationships.
David:
Yeah, most definitely. And I think I’ve alluded it to you before, Darren, I think not only is it trickier, but it’s more interesting than the procurement stuff. And I like procurement, but I just think the marketing side is head and shoulders above all just the work a day procurement attitude to let’s say buying a widget.
Darren:
Yeah. Well, do you think part of that is a realization that marketing costs, and you said this before, so I’m probably answering my own question, but marketing costs are really the basis of organizational growth. They are an investment, because you would certainly from a sourcing and procurement perspective, take a very different approach to a investment than you would a cost, wouldn’t you?
David:
Well, you’ve probably read Buying Less For Less by Gerry Preece, an old guru from Procter and Gamble, I believe it was, many years ago.
Darren:
Yeah.
David:
And he talked about … asks two guys to buy a statue each and whatever the budget is, $10,000, one has to buy one cheaper and one has to buy one that’s going to be worth more in the future.
You don’t really have to see much more after that, Darren, the cheap one won’t be worth very much. And we work a lot in cosmetics, in my current role, you can sell Finding Bigfoot on Discovery Channel to an old guy in the middle of the night, but it won’t sell mascara.
Darren:
Yeah. You mentioned about finance and procurement. We’re facing, what do they call it, global economic headwinds. I’m also hearing from procurement people an increase in pressure, particularly from finance, to look for savings that they can book to the bottom line.
Do you think that in the face of tightening monetary policy around the world, that that pressure is being applied back to procurement, to look for ways of reducing cost?
David:
Most definitely. Both in terms of process, validating it with your stakeholders. But for you and me, I suppose Darren, and the most interesting thing is I’m seeing it happen both ways in real time. So, during the pandemic we invested a lot more in E-com with few players, so we’re selling more online basically.
Darren:
Yeah.
David:
And reduced our bricks and mortar investment. And we saw another age, of course, travel, car fleet investment, things like that. So, I saw it in other areas, but I saw let’s say more than a concomitant or reverse concomitant relationship between online investment with pure players in E-com to the reduction in investment. And we’re being asked to reduce and get the same for less and retail. And get more for more, in for example, media.
So, our awareness is shot through the roof because we’ve got great performance just now. And we like to say, well that’s top line. We’re helping you with the top line part. We know you’ve got trouble here and we’ve got someone with a different attitude on my team who can help you with that different skillset.
But it’s really interesting to see it because we just basically look at 12 month or calendar period, spend as our trend, not what’s going to be invested necessarily. And we can see that’s happened in real time over a three-to-four-year period.
Darren:
Right. You mentioned media there, well again, that’s almost 10 years, 2015, the lid blew off the industry with all these accusations and evidence of a lack of transparency.
Today there’s still issues around things like data’s ownership and security. Ad fraud still seems to be an issue, particularly in some of the digital channels. There’s still accusations of not complete transparency in a lot of the media buying relationships. This is obviously fertile ground, but quite difficult areas to navigate from a procurement perspective.
David:
It is and it isn’t. It can be in terms of financial audit, if you’re talking about, you got what you bought. I would say if you’re talking to purchasing procurement people, by the way, I used to interchangeably source and direct procurement.
The pressure would be there, be for them to talk more about a financial audit than a relationship audit that you’re the expert of that or a performance audit in terms of media.
What happens in our case is I work in a European zone; we can see that it’s almost like a continuum north to south. So, financial audits are more, let’s say diplomatically, they yield more perhaps the further south you go.
And you know yourself, the landscape in Europe, you have agency deals and you have client deals, you have client deals in the Nordics and most of the stuff from the actual compliance. So, it’s like oblique.
Financial audit was about our relationship and how we behave and how we share information, how we brief the agencies. Whereas further south you might find something different happening.
So literally, we were expected to do that from our internal compliance point of view, reduce risk, but it yielded nothing. And the agency was fine with it. You open the doors, come in, you’re welcome. Bye-Bye again, a few days later. It was not an issue.
Darren:
It’s just I saw on LinkedIn and Nick Manning made a comment on it that there was a conversation around agencies using staff from some of the big tech platforms in-house, as a way of getting a financial benefit from those media providers, that the big tech platforms were actually filling up agencies who were short of people with their own staff. And it seems to me that it’s symptomatic of possibly a system that’s still trying to find new ways of gilding the lily, so to speak.
David:
Well, are we talking about permanent or are we talking about contract?
Darren:
Well, putting them in place to make up for talent shortfalls was the inference of the article. It was a bit hard because there were no actual examples. It was more-
David:
No, no, no.
Darren:
As you know, the industry thrives on this sort of vague accusations.
David:
I suspect as a subject we’re going to come onto to later when we talk about the appropriate profile for procurement people. But the situation you’re describing is really interesting. So, we’re talking about, let’s say a media owner almost, or an analytics owner, moving to an agency.
But we also have the instance of people moving from an agency to a permanent or temporary role with client.
Let’s say the second situation is more poacher turned gamekeeper. And the first situation is maybe perhaps letting the fox in the hen house. I’m not really sure the two are compatible.
Darren:
No.
David:
And then an example, who you going to get in procurement is also a gamekeeper example, but a really interesting one.
It is good to hear, but it’s mostly based around knowledge sharing. We’ve seen the mostly good in that, where there’s been agency people coming into the client site permanently tamper, it’s been only positive.
And I can only compare it down to working with people like you and my media auditors and other people at ProcureCon, for example, my journey in marketing procurement wouldn’t have been the one that … not even half the one that’s been, without speaking to, let’s see, impartial experts.
Darren:
Yeah. So, you are a director of procurement now, aren’t you? That’s your title.
David:
They call it that.
Darren:
Yeah. But that means-
David:
I’ve got a team of four.
Darren:
Yeah. Well, you’ve got a team, you’re managing a team. So, I am interested in your perspective on that ongoing discussion about where is the best place to recruit procurement people for marketing.
And the reason that — I think I mentioned to you previously that Barry Bernard, Adidas will often say better to get marketers with an analytical bent and train them up in procurement than trying to get a procurement person’s head into marketing, and particularly something as complex as media.
David:
Yeah. And you probably know Barry and I were colleagues many, many months ago, Guinness in Dublin. And yeah, he’s absolutely spot on. You can look at agency and you can look at stakeholder side actually in marketing.
And I think I mentioned that you off the mic, on another occasion. It depends on personality, depends on background and interest. You still need the analytical interest, for example, you need the analytical interest, the basics of understanding a spreadsheet and how to put it into a graph, things like that. Or how to kind of look at data, specifically on media performance.
Other than that, as I’ve said before how do I put this politely? The procurement stuff’s easier to learn.
Darren:
Well, because a lot of it is a methodology, isn’t it?
David:
Yes.
Darren:
Whereas a lot of what you learn about marketing and advertising and even media has deep roots in things like culture. Advertising agencies do have a particular culture. And it’s interesting to see when people from agencies make the leap across to the marketing side, for instance, how that it can often be a cultural adjustment for them.
And that’s hard to teach. That’s hard to learn. I think, when we met in the early days, you had the right attitude of just asking those questions, explain it to me like a five-year-old.
But a lot of people are not willing to do that. And if you don’t ask those questions or you haven’t been in those environments. And worked in those environments, it is a hard thing to appreciate.
David:
Most definitely. So, the segue, the easy way in is to come from that background to start off with. But let’s be honest about things. The relationship in letting purchasing procurement (keeps in both words), procurement into that discussion with the CDMO or let the agency saying okay, we’ll have a meeting with you and no one else is here. That’s completely normal nowadays. It wasn’t 20 years ago.
But also, as I said, the profession has changed in the 20 years. There are more attractive roles. I’ve seen a particular person that was recruited before I joined my team, come into procurement from marketing. This is a previous quote and was asked as a favor, “Look, we’re in the middle of a pitch, you know about pitches. You were from the stakeholders side. Come in and look at this.” And this person was just shocked how interesting it was.
And the deeper and deeper he dug, how much you realize you could use the auditor, use the consultant, and then start to address the way we briefed agencies and the way we invested their money. You be better investing it there further down the pipeline. You’re creating awareness up here, but you’re suffering in conversion down here.
And I would almost argue that’s maybe a conversation, someone that came from pure procurement wouldn’t have had, certainly not early on in the discussion with a stakeholder. And the pay’s there, Darren. The pay’s there.
So, they’re maybe saying, “What the hell? This is fun.” People take me seriously. I’m right in the middle of the spider’s web of information here, and I can see the impact that contract I did with that agency is actually improving topline growth for my own company.
And an empowerment journey that most other marketers don’t get. I had a guy from Johnson & Johnson at ProcureCon four years ago, and he said, I learned more … he came from marketing, I learned more about marketing and procurement marketing than he did in marketing. Bit of a mouthful.
Darren:
And I’m actually not surprised about that because I think marketing is a discipline and Professor Mark Ritson who runs his mini-MBA in marketing and brand will tell you that it’s important to learn the marketing process, the sort of methodology and have that as a base. But it’s interesting.
And the thing that always excites me is looking at marketing from a business perspective. And I think that’s where for procurement, it becomes really interesting because it’s understanding where the money’s invested and why, and getting to is there a better way of doing this? That value proposition is ultimately every dollar that goes in should be returning some sort of investment.
And one of the exciting things for me is artificial intelligence and the huge amounts of data is starting to make the … what was that old question of half my advertising budget’s wasted? I don’t know which half, but in actual fact we’re so close or we can answer that question now.
And to me, that’s the next opportunity for marketing procurement is to be the sort of commercial partner that is helping answer that question.
David:
Yeah. It’s the whole story about attribution, isn’t it, Darren? The more we’re going online, the more we can plot the whole journey, and the more we can see cause and effect.
Yes, I have seen a huge difference in that area, but at the same time I’ve seen a concomitant, enormous — an enormous reduction in TV investment. It’s a very interesting, in the Nordics, for example, if you have four countries, nominally four countries, four bigger ones, they’re roughly the same size apart from Sweden.
So, when TV investments drop, then the questions start to appear on horizon. Should it be investing in this at all on that brand? When am I going to pull the plug on that, because influencer spends advocacy is increasing like no tomorrow.
So, we are seeing that coming back to your question or your point is we’re seeing that in real time. So, we’re seeing the smoke and mirrors, let’s say, of the past and not being able to link that to sales or share of market, share of voice, all that kind of stuff. Now we’re seeing it in real time, but it does happen.
Darren:
Yeah. I think also breaking through to your point, the last click attribution, because the trouble with attribution is that it gets horribly skewed by the way the attribution model’s built. Last click means that you put everything in search for instance, because that’s where you get direct attribution.
But an actual fact, these new models are actually econometric models that are producing real-time recommendations of where to invest. Yeah. And I think that’s the exciting part. It’s no longer being skewed by the measurement, that the huge amounts of data being analyzed means that we’re starting to see real trends that then informs marketing decisions.
David:
Most definitely. We are working more with our, what we call a pure player model here in the Nordics. We don’t do a lot of B2C in my company at the moment. And as I said, there’s still quite an element of mass awareness TV, et cetera.
So, we’re obviously in a transition phase, Darren. So, it’s extremely exciting to see the development of what you’re talking about. You’ll be seeing cause and effect in real time. And I’ll be able to, let’s say, adjust your investments accordingly.
We’re able to do that certain on the digital side at the moment, and we’re empowering our agency to do so as well.
But exciting times, exciting times. We’ve not plotted the field journey this year. We go off air and back on air, however you want to describe the situation. So, cause and effect, let’s say there’s still a little bit of Vaseline on our reading glasses. But they’re getting clearer by the day.
Darren:
Well, because I know about two or three years ago, the WFA launched their Project Spring, which was all about procurement, putting more focus on value and the efforts of measuring value and less on cost, which is an interesting conundrum because value is invariably a function of cost.
Whatever it costs you value will come down to, well, what’s the return on it, in some way, whether it’s measurable or not.
Do you see that the pursuit of being able to measure value or be able to create value assessments is an important part of the procurement role now in marketing?
David:
If it’s not, it’s doing a very good job of pretending to be that or appearing as that. Let’s say it gives you the right to … it’s part of a vision as I mentioned there that you create for your stakeholders. And a concrete example of that with — someone on my team uses … I can’t remember if there’s a quote that you used, Darren, is it all the Oscar Wilde quote, “A fool knows the price of everything and the value of nothing.”
And by the way, there’s a lot of your quotes that have been well worn now and I’ve passed on. I try to remember which ones I borrowed from you constantly.
Darren:
It’s okay. I only steal from the best. So, no-
David:
Well, Oscar Wilde’s not a bad pick.
Darren:
Not a bad start.
David:
Not a bad start at all. It’s essential. It’s part of the vision you create with those guys and okay, let’s assume they set up at that. That sounds good. That’s sounds good. Okay. What does that mean? And the more nutty you get, the more granular you get in a description of how the agency’s performance is going to help them achieve what they want to do, the better it’s going to be.
But I’m still in a situation where I have colleagues trying to recruit people from marketing into, let’s see, above the line marketing roles to use an old-fashioned expression and struggling. But I also have some other colleagues not quite getting there. So, let’s say the discussions come from fees to, we call it cost and performance in some of our audits.
And in your world, that would mean that would manifest itself as cost per milli or cost per impression. Right? Great.
Darren:
Yeah.
David:
But not year on year, if you’re benchmarking last year in an inflationary world, unrealistic and I do the dot, dot, dot and I see some of my procurement colleagues, looks starting to glaze over because the next part, the next level was the important one.
Which ones are, and then I’m going to go back to one of your expressions. It’s a motto for the guy on my team as well, input to output to outcome. Darren, we’ve actually plotted that so we can describe the continuum of KPIs that we describe that.
So, the value part, you’ll never get an agency to take full responsibility and you’ve got another graph on that for your sales or your market share. Because there are too many variables in that mix, specifically with what your competitors are doing.
But the further you push the agency to share risk and reward along that continuum of the actual end of value, the better it is getting. And by the way, you’re actually going beyond what most of your stakeholders recognizes, how they classify success for their agencies and take them onto the next level.
Specifically on media, there’s a lot of people wanting to be creative. So, they’re not all comfortable with the media space. I love it. It’s become my favorite. But the input to output to outcome is very, very interesting. Because you’re not, let’s see, on a very vulgar level, you’re not paying for hours anymore.
Darren:
No, no. And yeah, this is ultimately where we need to get to. Look, I agree with you. I think media is so interesting. I think I wrote an article about it. It’s like the game of Go, the black and white tiles that they play in Asia.
David:
Oh yeah.
Darren:
Yeah. And the only rule is you put one tile down and if you encircle your opposition, you get all their tiles. Yeah. Very simple rules, simpler than chess. Okay.
And I think media’s the same because most people think, oh, well, media’s simple. Media’s so simple. You just have to buy the right placement in the right media at the right time with the right message and scale. And you’ll get results.
Well yes, simplistically, but it takes a lifetime to learn the game of Go, to master it. It takes a lifetime to master media. And the fact that it’s constantly evolving means that it’s a constant learning process. I think that’s what I love about the media challenge. Is that it looks simple, but it’s actually incredibly nuanced the more you go down into the weeds.
David:
Most definitely. I like to talk about the key building blocks. I think I mentioned to you before, I’ve been lucky and I’ve been skillful, I’ve not been skillful, but there’s hard work we put in place. There’s an awful lot of luck.
So, let’s say I’ve been about four situations where we tried to improve media, having conversations in all directions. A resistant marketing director, CDMO, no media auditor in place. A reluctant agency. Also a very kind of inflexible contract framework to work on.
I’ve gone from the opposite situation as well. So, very interested CDMO media based, there’s a media auditor already in place and I’ve got to see one of the biggest things is … and I’ll come back to your point. There’s a method in my madness here, is that sometimes when you get a great agency, you can evolve that contract.
And when you’re able to evolve a contract and talk about value, sometimes conversations are uncomfortable. But I actually accelerated my learning when all parties were willing to open up and learn themselves and try new things.
One output of that was being able to sort of silo and segment countries or types of medium rather than taking averages of performance. That’s a very basic level and put that on the bonus. But I’ve also seen intransigence from all sides and having to be — and by the way, this is the most important skill in procurement, selling, you have to sell.
Darren:
Yeah.
David:
Because the banging the table and negotiation stuff people associate with buying, that’s by the buyer. It’s not really important. It’s in selling internally. A great idea, how you’re going to help them achieve their wildest dreams.
Darren:
Well, I had a similar situation. I was brought in and the creative agency, the media agencies, the media agency and the client team all had different perspectives. They had a performance-based model that was so complicated that it hadn’t been reconciled for two years.
Like the model itself was so complicated that no one could work out what the payment was to the agencies. And I said, “Let’s simplify this.” And the agencies were saying, well, to the point you made earlier, “We can’t control everything. We don’t want it to be sales.”
And I turned to the CMO, I said, “What are your KPIs? What do you get bonused on?” Because I knew that all the marketing team were on personal bonuses, and they all shared the same KPIs. And it was like volume, a market share and something else. And I said, “Why don’t we just share that with all the agencies and bonus them in the same way that your bonused for achieving the same KPIs, you are sharing your KPIs with the agency.” Now everyone-
David:
With that kind of … agency was this?
Darren:
Well, creative and two creative agencies-
David:
I was going to say because I think we looked it up when I was in Sydney. Yeah.
Darren:
Yeah. And media and within six months, I checked in to see how it was going. And all of the marketers said, every meeting starts with how’s volume, how’s market share and whatever the other, KPI, that was the starting point for every conversation. And then every brief was how is this going to move those three things?
David:
Horses for courses, the right bonus for the right situation. If it’s too complicated, you can’t work it out. By the way, I used to be embarrassed if we hadn’t calculated it and paid it by February. So, that’s a very interesting that you-
Darren:
Two years.
David:
Exactly. Two years. But the other point there would be is if you’ve got the right agency on your … skills are very important, people, but if you’ve got a vested interest, shared risk and reward, then you’re more than halfway there. I’ve got to be honest.
I’ve met a lot of CEOs of agencies that were more risk averse than others. I’m happy to say at the moment, I’ve got one that really feels like their success is a link to ours, but that’s not a given situation.
Also, the other building blocks I told you about, there are other actual details you have to get in place, but these are the building blocks now. But the agency attitude is pretty much almost the single most important part. They won’t move on the journey otherwise.
Darren:
Yeah. I’ve noticed the clock; we’re running out of time. It’s just flown by. What’s the piece of advice that you would give anyone that’s starting out in marketing procurement or indirects and looking at marketing? What’s the entry point that they should be thinking?
David:
Oh, boy. It’s a really tricky one. I think, Darren, from my point of view, you can’t change the person. So, you can’t have any person. And also, to assume you could put anybody from any procurement background in that and they would have the right attitude. I’ve talked about this quite a few times and I think we talked about it in one of the articles I did for you a long time ago, is should they work together?
Sometimes they shouldn’t, sometimes they honestly shouldn’t. So, number one, it really depends on the person we’re referring to in that situation.
But the biggest learning stuff is great, if you’ve got an auditor, a relationship auditor, language wise, get in and speak to them. Get in and get your hands dirty and spend some time with the agencies. That’s incredibly important.
And I think let’s say the climate is more conducive to being able to do that. I’m not saying you will always be welcome, but let’s say 15, 20 years ago, it would’ve been a very odd thing to do because you might have been only there for the prep discussions twice a year.
But getting there and understand that the métier, as we call it at my company, understand the subject market you’re discussing.
But going back to your one, why for both those things, because it’s a value. So, understand value in any conversation, so that at top level you could challenge your stakeholders and another level you could challenge your agencies what value means rather than cost.
Darren:
Yeah. No, good advice.
David:
I’d like to make it simpler for you, Darren, and I’d-
Darren:
If only life was simple.
David:
Anyone could do it. Just think about that. Yeah. Yeah, yeah, yeah.
Darren:
David, great to chat. I really appreciate you taking the time and having the conversation.
David:
It’s always great to speak to you, Darren, good to see you looking healthy and well, and I always learn something when I’m with you as well.
Darren:
Likewise.
David:
So, I hope I’ve not actually quoted you when I didn’t know I was, but I tried to mention your name when I am.
Darren:
Good attribution there. Thanks a lot. Hey, look a final question before we finish, if you weren’t working in procurement, would you be happy in mechanical engineering?
