Brand marketing procurement teams unhappy with their KPIs: WFA study

Source: WFA’s “Setting and delivering targets in marketing procurement” report, produced in partnership with Flock Associates.

A new study by the World Federation of Advertisers and Flock Associates highlights a growing dissatisfaction among marketing procurement teams at large international brands with their current KPIs.

These teams seek to expand their success metrics beyond mere cost savings, arguing that the traditional emphasis on savings is insufficient for demonstrating their effectiveness amid harsh economic conditions.

The study's findings indicate a shift in focus from cost savings to delivering value, aligning with the objectives of Project Spring, initiated by the World Federation of Advertisers (WFA) five years ago. This initiative aimed to transform the perception and function of procurement towards valuing contributions beyond financial savings.

The study surveyed 51 senior marketing procurement executives from global corporations with a combined annual marketing expenditure of $114 billion. It examines how metrics influence behaviour and outlines the strategies these executives plan to employ in 2024 to bring additional benefits to their businesses.

Key findings:

• 52% said their target setters had 'good' or 'very good knowledge' of marketing. The result is that many are being asked to deliver blunt or disconnected objectives that will make it harder for procurement to work effectively with marketers and provide real value.

• 85% say they will add more value beyond savings in 2024, 13% will add a similar amount of value and savings, and only 2% feel they will add less value than savings.

• Media investments have been the focus for hard savings in 2023 (64% said it was the main driver) and will continue to do so (53% in 2024).

• Many brands are increasingly looking towards creative (19% said it was the main focus, up from 11% in 2023) and production (11% said it would become the main driver, up from 5%) for savings, taking advantage of technology advancements, including GenAI.

• Many targets are based on a simple percentage of media and marketing spend (38%), while a further 9% are based on last year’s achievements.

• Nearly a quarter (24%) said they were based on their company's financial requirements and overall savings targets, with just 15% saying they were based on detailed bottom-up category plans by marketing category and market. Most (67%) failed to recognise inflation mitigation as a hard saving.

• Saving expectations for 2024 are higher than those for 2023, with one in two organisations expected to deliver 7% savings and above and a further two in 10 expected to save more than 11% of their marketing investments. These are both significant increments compared to 2023, indicating a year of higher expectations for marketing procurement teams.

• Annual marketing budgets are expected to increase in 2024, with 32% of respondents saying spending will rise and just 18% expecting expenditures to decrease. The bigger the advertiser respondents, the more significant the proportion of those who expect budgets to increase.

• Different companies define savings in many ways. For instance, eight in 10 organisations consider savings versus last year’s fee hard savings, but only three in 10 view the difference between the original and negotiated final offer as hard savings. The approach to inflation is similarly inconsistent: Two in five consider inflation mitigation as hard savings.