According to a recent white paper by McKinsey & Company, marketing spend management plays a critical role in surviving business downturns and promoting future growth – and technology to support enterprise spend management is equally essential.
“Spend management can free up as much as 20 percent of a marketing budget (even more within specific areas),” the McKinsey paper advises. “Effective spend management enables agile decision making within days, allowing marketers to rapidly redeploy funds where they matter most.”
You can download the complete McKinsey document by using this shortcut: https://tinyurl.com/y4y8rkp3. Or, here is the complete McKinsey URL:
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/an-essential-marketing-tool-in-a-downturn-spend-management
The following is Noosh’s interpretation and summary of the major points made by McKinsey in their paper, entitled: An essential marketing tool in a downturn: Spend management.
Weathering a Downturn and Catalyzing Future Growth
According to McKinsey, the four key pillars of marketing spend management are as follows:
- When consumers’ daily lives fundamentally change as new digital habits emerge, marketers must have a granular understanding of their target consumers and whether they are reaching them cost-effectively, McKinsey says. Think through which marketing agency services you really need and double down on what works. Create a flexible and iterative statement of work (SOW) and make rolling adjustments to your agency agreements throughout the year to add new needs or subtract contracted items that are no longer necessary, to eliminate unnecessary spend.
- Identify inefficiencies in the way work is done and make appropriate changes – including work that is done at home. Implement faster decision making. One way to do this is to move from a linear hierarchy to a decentralized, agile model with highly focused tasks and clear key performance indicators (KPIs). When appropriate, evaluate and reuse previous content via a robust asset-management platform (our emphasis) that enables efficient reuse of photos, videos, and other content. Make sure that leaders champion responsible spending decisions as a valuable part of an ROI mindset. Also, work closely with finance to reform the annual budget process with next year’s strategy and objectives front and center. Continuously demonstrate the value of marketing, McKinsey suggests.
- Optimize the location where work is completed – in-house or through agency assets. A primary goal of insourcing should be the strengthening of core marketing muscles. Bring business-critical activities in-house – usually those items that require a deep knowledge of the business, to accelerate the speed to market, or to allow you to leverage a specific capability for competitive advantage. Create the right ecosystem of agencies with the awareness that many CMOs don’t believe they get best-in-class capabilities from their agencies – whether media buying, segmentation, analytics, or marketing technology. Create a detailed view of the agency ecosystem and establish clarity on how each agency fits together in a cohesive model, McKinsey advises.
- Know exactly what you’re spending and pay the right price. To do that, you need transparency and visibility – including a robust spend taxonomy, with perhaps as many as 60 different classifications. And you need spend management technology (our emphasis) capable of tracking everything with disciplined operating models that ensure accuracy and completeness. For media buying, you may want “mark-to-market” auditors or a marketing-ops / procurement manager who can hold agencies accountable for all spending. Doing the right due diligence before you select agency resources can conserve millions of dollars for reinvestment in other priority initiatives, according to McKinsey.
Noosh encourages you to review the complete white paper on Spend Management from McKinsey & Company. The full document can be accessed by using this shortcut: https://tinyurl.com/y4y8rkp3
Final Thoughts from Noosh
Every enterprise that engages outside resources for marketing will realize significant savings and ROI by implementing a modern spend management system. Many companies will benefit from a platform specifically tailored for marketing spend that provides analytics at both the line item and deliverable attribute levels. Generic spend management systems are not adequate for the needs of today’s global marketing organizations.
The Noosh SaaS spend management solution enables enterprises to collaborate and transact with third party marketing agencies and other suppliers to execute campaigns all the way from creative briefs through final production and invoicing.
By capturing deliverable details at the scope or specification level, Noosh helps marketing operations and procurement professionals identify the cost drivers of marketing tactics and fully optimize the marketing mix. To contact a Noosh consultant for more information, email info@Noosh.com, dial +1-650-637-6000, or fax +1-650-965-1377.