Marketing Materials and Services Spend-Getting More Bang for the Buck

Marketing Materials and
Services Spend
Getting More Bang for the Buck

August 2007Marketing Materials and Services Spend
Page 2


Executive Summary
The spend category of marketing is somewhat different from other indirect "Our strategy (in a particular
categories. Traditionally, marketers spare no expense to achieve high quality, area) for expected savings
superior service, and consistency. After all, their activities are ideally "revenue- was at least $1.8 million.
generating," thus cost is not always top of mind. This is where procurement However, our program was a
success and we were able to
expertise, together with marketing, can develop strategies to improve control,
visibility, and even performance of marketing spend. This research explores achieve savings of nearly $2.5
million on a sub-category
marketing spend and uncovers various challenges and strategies that Best-in-Class within marketing."
enterprises have utilized to achieve superior performance.
- Procurement Manager,
Large North American
Best-in-Class Performance Enterprise
Aberdeen evaluated survey responses of approximately 270 enterprises and
distinguished Best-in-Class companies using two key measures: (1) average savings
rates achieved across five major categories of marketing spend (which include
printed materials, branded and promotional merchandise, direct mail, creative and
marketing services, and media space), and (2) the degree of enterprise-level visibility
into the management of this category. Best-in-Class companies are notable for their
higher levels of collaboration between procurement, marketing, and other key
stakeholders. Best-in-Class companies also experience the following advantages:
" An average of 14.7% savings on the five categories of marketing spend, in
comparison to 7.8% for all other enterprises
" A compliance rate that is 77.5% higher than the average enterprise
(supplier compliance to negotiated contracts, SLA's)
" A 37% lower rate of re-orders for marketing materials in comparison to all
other enterprises
Competitive Maturity Assessment
Survey results show that firms enjoying Best-in-Class performance shared several
common characteristics:
" Sixty-seven percent of the Best-in-Class utilize a competitive bidding
process for various marketing categories
" Approximately 50% have been able to aggregate and centralize enterprise-
wide spend on marketing materials and services
" Sixty-four percent of the Best-in-Class have established standardized
processes and policies on procurement of marketing materials and services
Required Actions
In addition to the specific recommendations in Chapter Three of this report, to
achieve Best-in-Class performance companies must:
" Streamline procurement processes and encourage collaboration between
procurement and marketing groups
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" Initiate the Request for Proposal (RFP) process for each category, or a
combination of categories, depending on the suppliers' capabilities
" Identify current marketing suppliers and optimize this supply base
" Track savings captured and formulate a plan for realization of savings or
reinvestment into other marketing areas
" Consider the usage of technology and/or service provider to improve
control and overall management of the marketing category
© 2007 Aberdeen Group. Telephone: 617 723 7890
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Table of Contents
Executive Summary...................................................................................................................... 2
Best-in-Class Performance.......................................................................................2
Competitive Maturity Assessment.........................................................................2
Required Actions .......................................................................................................2
Chapter One: Benchmarking the Best-in-Class .................................................................... 5
Maturity Class Framework ......................................................................................6
Best-in-Class PACE Model.......................................................................................6
Savings Opportunity ..................................................................................................7
Chapter Two: Benchmarking Requirements for Success ................................................... 9
Competitive Assessment....................................................................................... 11
Level of Visibility...................................................................................................... 12
Organizational Capabilities ................................................................................... 12
Technology Usage and Enablers .......................................................................... 14
Chapter Three: Required Actions ........................................................................................16
Laggard Steps to Success....................................................................................... 16
Industry Average Steps to Success...................................................................... 16
Best-in-Class Steps to Success............................................................................. 17
Appendix A: Research Methodology....................................................................................19
Appendix B: Related Aberdeen Research...........................................................................22

Figures
Figure 1: Involvement from Procurement.............................................................................. 6
Figure 2: Largest Opportunity for Savings ............................................................................ 7
Figure 3: Average Savings Achieved......................................................................................... 8
Figure 4: Strategic Actions - Organization and Process Related....................................10
Figure 5: Strategic Actions - Technology and / or Service Related...............................10
Figure 6: Responsibility of Marketing Materials and Services Spend..............................13
Figure 7: Performance Measurement of Marketing Materials Suppliers .......................13
Figure 8: Technology and/or Service Usage.........................................................................14
Figure 9: Current and Planned Implementation of Various Capabilities.......................15

Tables
Table 1: Top Driving Factors to Explore the Marketing Category.................................. 5
Table 2: Companies with Top Performance Earn Best-in-Class Status .......................... 6
Table 3: Best-in-Class PACE Framework............................................................................... 7
Table 4: Average Annual Spend on Five Marketing Categories ........................................ 8
Table 5: The Competitive Framework..................................................................................11
Table 6: Companies that have High Visibility into Various Data Types........................12
Table 7: PACE Framework Key..............................................................................................20
Table 8: Competitive Framework Key..................................................................................20
Table 9: Relationship Between PACE and Competitive Framework.............................21
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Chapter One:
Benchmarking the Best-in-Class
he category of marketing has traditionally managed to escape procurement's
Fast Facts
grasp. Often, this is marketing trying its best to avoid the "cost cutters." It is
T true that certain categories within marketing cannot be purchased the same – Best-in-Class achieved
on average 14.7%
way that pencils and staples are bought. However, despite the substantial potential savings on five categories
for cost reduction, marketing spend has remained outside the confines of traditional
procurement because of its unique requirements. Aberdeen's data on the of marketing spend
performance and strategies of Best-in-Class enterprises challenges the belief that – Top planned strategic
marketing is a special category that should fall completely out of procurement's action (37%) is to utilize
a strategic sourcing
reach. The research is centered on five major categories, printed materials,
branded / promotional merchandise, direct mail, creative / marketing process/solution to
address various
services, and media space. marketing categories

Table 1: Top Driving Factors to Explore the Marketing Category
Driving Factors %
Reduce overall enterprise spend on areas of indirect spend 42%
Understand and improve visibility into enterprise spend on marketing 30%
Procurement looking to the marketing category for further savings 26%
Need for procurement expertise in collaboration with marketing 22%
Efforts to aggregate and centralize enterprise-wide spending on marketing 19%

Note that the responses in Table 1 are influenced by the majority of survey
respondent functions, which is procurement. Surprisingly, the marketing function's
responses (23% of survey respondents) were not unlike those of procurement.
Thirty-percent reported a major driver is the reduction of overall indirect spend
and 33% cited that understanding and improving visibility into marketing spend is a
driver.
Figure 1 shows the five major marketing categories and the extent to which
procurement is involved. Printed materials is one area in which procurement has
continuously been increasing its presence. However, 25% of respondents report an
increase in procurement involvement in creative and marketing services - with 42%
citing no involvement and the remaining 33% showing some involvement. Of the
Best-in-Class enterprises, a higher percentage report significantly more involvement
for all categories.

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Figure 1: Involvement from Procurement
Significantly More Involved Not Involved at All
Printed materials 49% 14%
Branded & promotional
38% 25%
merchandise
Direct Mail 28% 31%
Creative & marketing
25% 42%
services
Media space 24% 51%

Source: Aberdeen Group, August 2007
Maturity Class Framework
Aberdeen used two key performance criteria to distinguish Best-in-Class enterprises
from Industry Average and Laggard organizations:
Table 2: Companies with Top Performance Earn Best-in-Class Status
Definition of
Mean Class Performance
Maturity Class
" 14.7% average savings across five categories of
Best-in-Class:
marketing
Top 20% of
" An average of 51% have "high visibility" into data such as
aggregate spend by brand, inventory levels, transaction level
performance scorers details, and total cost of marketing initiatives
" 9.8% average savings across five categories of marketing
Industry Average:
Middle 50% of " An average of 15% have "high visibility" into data such as
aggregate spend by brand, inventory levels, transaction level
performance scorers details, and total cost of marketing initiatives
Laggard: " 5.7% average savings across five categories of marketing
Bottom 30% of " An average of 6% have "high visibility" into data such as
aggregate spend by brand, inventory levels, transaction level details,
performance scorers and total cost of marketing initiatives
Source: Aberdeen Group, August 2007
Best-in-Class PACE Model
Improving the procurement and ongoing management of the marketing category
requires a combination of strategic actions, organizational capabilities, and enabling
technology that can be summarized as follows:

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Table 3: Best-in-Class PACE Framework
Pressures Actions Capabilities Enablers
" Reduce " Aggregate and centralize " Conduct competitive bidding " E-procurement capability for
corporate enterprise-wide spending process to select preferred purchasing marketing materials
spend on on marketing materials vendors for this category " Outsourced third-party or
marketing and related services
" Ability to measure managed service provider
materials and " Instituting collaboration performance of suppliers (e.g., " Online design collaboration and
services between procurement lead-times, pricing)
approval
and marketing " Ability to monitor and " Collaborative workflow capability
" Applying procurement enforce internal compliance (allows buyers and suppliers to
principles to various with negotiated supplier manage specifications, quotes,
categories of marketing agreements costs, etc online)
spend " Procurement expert focused
" Change order/audit trail tracking
" Rationalize suppliers for on the spend category of
marketing materials and marketing " Supplier management and
monitoring
related services
Source: Aberdeen Group, August 2007
Savings Opportunity
Research showed valuable data in terms of identifying where respondents believe
the largest opportunities lie for savings within the five marketing categories.
According to 61% of respondents, printed materials are a sub-category that offers
the largest opportunity for savings. However, spending on creative / marketing
services and media space (two areas where procurement is rarely involved) was also
reported to have savings potential, according to 45% and 37% respectively.
Figure 2: Largest Opportunity for Savings
Printed materials 61%
Creative & Marketing services 45%
Media space buying 37%
Direct marketing 27%
Branded & promotional
merchandise 26%

Source: Aberdeen Group, August 2007
To provide some context around the amount of spend enterprises in this study are
dealing with, spend data was collected for these five categories (Table 4).


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Table 4: Average Annual Spend on Five Marketing Categories
Mid Market Large Maximum
Media space $ 2,675,546 $12,224,093 $84,000,000
Printed materials $ 1,851,597 $ 8,974,302 $70,000,000
Direct Mail $ 854,483 $ 4,491,716 $28,000,000
Branded/promotional merchandise $ 1,002,097 $ 6,182,354 $75,000,000
Creative/Marketing services $ 1,105,968 $ 7,392,156 $50,000,000
Aberdeen Group, August 2007
With an indication of the amount of spend involved, Figure 3 shows the average
percentage savings that Best-in-Class, Industry Average, and Laggard enterprises
have been able to achieve.
Figure 3: Average Savings Achieved
Best in Class Average Laggard
18.8%
14% 14.2% 14.6%
12.8%
11.9%
9.8% 10.0%
9.1% 9.4%
8.4%
6.9% 7.1%
6.5%
5%
Media space Printed materials Direct marketing Branded & Creative &
promotional marketing
merchandise services

Source: Aberdeen Group, August 2007
Aberdeen Insights - Marketing Sourcing Strategy
The first step for procurement is to engage with marketing during the
budgeting phase to better understand the various initiatives and identify
opportunities. Then, target savings goals should be developed while keeping
mind the amount that will be realized versus reinvested into other marketing
initiatives. Procurement should work towards a better understanding of the
various marketing sub-categories and based on enterprise-wide demand,
develop a procurement strategy for each category.
Initiate a Request for Information (RFI) process to determine a short-list of
vendors for a specific sub-category (or combination of sub-categories). With
the short-listed vendors ask for an RFP submission (face-to-face presentation
suggested, due to creative nature). Move on to contract negotiations, if
appropriate.

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Chapter Two:
Benchmarking Requirements for Success
hat are enterprises doing to place more marketing spend under
Fast Facts
management? Aberdeen research explores the various actions that
W en terprises have already implemented, are currently underway, or are – 57% of Best-in-Class
companies have a
planned for initiation. This will provide further insight into enterprise strategies for procurement expert
tackling this category.
focused on the
marketing category
Case Study - Large Financial Services Enterprise
– 47% reported plans over
the next year to utilize a
With nearly 400 print suppliers and 48 million pieces of direct mail and
other communications per year, a large financial services enterprise needed technology or service to
improve the
to consolidate their marketing spend amongst all their subsidiaries and management of this
centralize their processes.
category
The procurement individual overseeing the marketing category came from a
marketing background and this group essentially serves as an extension of
the marketing group. The procurement department was able to successfully
reduce their supplier base to only 17 vendors by initiating an RFP process.
By doing so, the enterprise was able to realize a cost savings of nearly 60%
for their total print spend, specifically a 75% cost savings for their direct mail
campaign spend.
"Over the last year we have sourced direct mail, commercial print,
promotional items, fulfillment and even automated voice mail delivery. Next
year we hope to tackle the agencies," said the Director of Procurement.
One of the main factors of this transformation was collaboration between
the marketing and procurement departments, which allowed the enterprise
to more easily determine the value of printing mail campaigns internally or
externally.
"When a mail piece has to go out, the details are sent to procurement. We
tell the marketing department the best place to print," said the Director.
"When working on a new piece, they'll also ask procurement what is the
best way to do it. The big thing here is coming out as a team and
collaborating with each other."

Figure 4 shows organizational and process-related strategies. Research showed that
a surprising 39% currently have initiatives underway to apply procurement concepts
to various areas of marketing spend. In terms of establishing standard policies for
procurement of marketing materials, approximately 35% are currently undergoing
this standardization.
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Figure 4: Strategic Actions - Organization and Process Related
Already in Place or Completed Currently in Progress Plan to Execute
Best in Class
Rationalization of suppliers for printed Already in Place
30% 32% 26%
materials and related services 58%
Consolidation of media buying agencies 27% 21% 20%
50%
Aggregate and centralize enterprise-w ide
spending on print and related services 23% 31% 31% 41%
Establish standard policies and procedures 21% 35% 35% 53%
Applying procurement principles to various
21% 39% 32%
categories of marketing spend 56%
20% 36% 32%Instituting collaboration betw een
procurement and marketing 42%

Source: Aberdeen Group, August 2007
Continuing with the topic of strategic actions, survey respondents provided data on
the use of technologies and services within this category. Figure 5 shows that the "Our major issue was that
percent of enterprises that currently use procurement or sourcing technology for the number of people able to
marketing spend is still minimal (under 20%). On the other hand, the use of a purchase print products was
sourcing solution for marketing is currently in progress for about 31%, with another nearly 400. It was a massive
37% planning to implement this capability. issue, not to mention that
there were over 250
Comparing this to Best-in-Class data is very telling - approximately 67% of the top- suppliers. There was limited
performing enterprises currently conduct competitive bidding, compared to 27% of coordination at the corporate
all other companies. Best-in-Class use of sourcing and procurement solutions is also procurement level, which
higher than other companies. resulted in limited visibility at
the service level."
Figure 5: Strategic Actions - Technology and / or Service Related - Director of
Procurement, Large
Already in Place or Completed Currently in Progress Plan to Execute North American
Manufacturer
Conduct competitive bidding process to
27% 29% 32%
select preferred vendors for this category
Contract w ith a print management company 21% 17% 23%
17% 31% 37%Utilize strategic sourcing solution for
various marketing categories
Utilize e-procurement solution for
14% 23% 34%
purchasing various marketing categories

Source: Aberdeen Group, August 2007
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Competitive Assessment
The aggregated performance of surveyed companies determined whether they
ranked as Best-in-Class, Industry Average, or Laggard. In addition to having common
performance levels, each class also shared characteristics in five key categories: (1)
process (standardization, procurement concepts); (2) organization (collaboration
between procurement and marketing, demand aggregation, and centralization); (3)
knowledge (supplier performance measurement, reporting, and analysis); (4)
technology (sourcing and / or procurement solutions, print management providers);
and (5) performance management (ability of the organization to measure the
benefits of a program and use the results to improve key processes further).
Table 5: The Competitive Framework
Laggards Average Best-in-Class
Establish standard policies and procedures
8% 22% 64%
Process Applying procurement principles to various categories of
marketing spend
11% 16% 52%
Procurement expert focused on the spend category of marketing
14% 19% 57%
Regular collaboration between procurement and marketing in
Organizational purchasing of marketing materials and services
Structure 10% 15% 49%
Aggregate and centralize enterprise-wide spending on marketing
materials and services
14% 24% 49%
Reporting and analysis capability on marketing spend categories
5% 21% 60%
Knowledge
and Data Utilize e-procurement solution for purchasing various marketing
categories
7% 15% 42%
Utilize strategic sourcing solution for various marketing
categories
7.5% 13% 45%
Technology Contract with a managed service provider (i.e., third-party to
and / or manage all printing / marketing needs and related services)
Service Usage 6% 16% 39%
Conduct competitive bidding process to select preferred vendors
for this category (RFP, RFQ)
13% 30% 67%
Ability to monitor and enforce internal compliance with
negotiated supplier agreements
Performance 8% 12% 39%
Metrics Ability to measure performance of suppliers (e.g., lead-times,
pricing)
13% 18% 50%
Source: Aberdeen Group, August 2007
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Level of Visibility
With "Marketing ROI" being a key metric for any marketing organization, it is
surprising to see the limited level of visibility that enterprises have into data such as
spend by brand, inventory level, transaction or job level details, and compliance to
SLAs or contracts. On the other hand, Best-in-Class enterprises have substantially
higher levels of visibility. For example, 60% of Best-in-Class companies have "high
visibility" into spending by brand, versus the average of 27%.
Table 6: The Percentage of Companies that have High Visibility into
Various Data Types
Data Types Best-in-Class Average
Spend by brand 60% 27%
Spend by project (e.g., marketing campaign,
56%
print campaign) 22%
Cost savings 54% 18%
Total costs (including logistics, rush charges,
53%
re-orders, etc.) 19%
Inventory levels (e.g., printed materials) 49% 26%
Total amount of spend on marketing
48%
materials and services 26%
Transaction / job level detail (e.g.,
40% 13%
specifications, estimates, orders)
Agency compliance to SLAs / contracts 30% 13%
Supplier compliance to SLAs / contracts 28% 10%
Source: Aberdeen Group, August 2007
Organizational Capabilities
An effective initiative to understand and control marketing spend can be
accomplished through the application of strategies that addresses marketing's unique
and dynamic operational, organizational, and behavioral issues. Figure 6 is a
depiction of the organizational structure of the survey pool, comparing Best-in-Class
companies to all other companies. It is clear that a large percentage (44%) of
enterprises still have a very fragmented approach to managing spend on marketing
materials and services.
Best-in-Class enterprises have a slightly different approach, with approximately 20%
having a fragmented structure, 34% having a central marketing function responsible,
and 15% having a central procurement function in place.
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Figure 6: Responsibility of Marketing Materials and Services Spend
Best in Class All Others
Fragmented across the enterprise various
44%
functions/business responsible for their ow n
21%
expenditures
29%
Central marketing function is responsible
34%
Marketing function responsible per business 18%
unit/region 25%
Procurement function responsible per business 6%
unit/region 6%
3%
Central procurement function is responsible
15%

Source: Aberdeen Group, August 2007
Supplier performance measurement is clearly a procurement activity, however, since
procurement's influence over marketing spend has been limited in the past, a
majority of enterprises do not measure the performance of their marketing
suppliers. As shown in Figure 7, 70% of all other enterprises have no formal process
for performance measurement, whereas, 29% of Best-in-Class have a standardized
process and 35% conduct proactive market pricing.
As procurement begins to better understand the marketing category, the dynamics
behind ROI goals, and the importance of quality and service-levels, they will be able
to improve their ability to measure these suppliers. Supplier relationship
management is critical in the marketing category, with the key word being
relationship. Ideally, enterprises want a very well-managed relationship with their
marketing suppliers to ensure top quality and service.
Figure 7: Performance Measurement of Marketing Materials Suppliers
70% Best in Class All Others
35%
29%
26%
10% 8% 10%
6%
4% 3%
No formal process Enterprise pays Supplier Proactive market Standardized
for supplier w hat suppliers performance pricing comparisons process, metrics
performance quote, little to nomeasurement left to on a job-by-job applied across all
measurement market pricing service provider basis marketing spend
comparisons

Source: Aberdeen Group, August 2007
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Technology Usage and Enablers
In terms of the technologies and services that can enable more efficient processes
and greater visibility within this category, there is nothing new here for
procurement functions, especially the more sophisticated ones. Figure 8 shows the
solutions enterprises are currently using versus how they plan to use these various
technologies and services in the coming years. Currently, a large percentage of
respondents are using manual methods or homegrown systems, however, a
significant amount (29%) of respondents report using a print management provider.
Over the coming year or two, there is clearly more interest in utilizing technologies
such as e-procurement or strategic sourcing but also in utilizing managed
services. Also, over this time-frame, use of the more manual or homegrown
systems seems to be dramatically decreasing.
Figure 8: Technology and/or Service Usage
Currently Use
67%
Plan to Use Within 12 Months
Plan to Use Within 12 to 24 Months
48%
29%
26%
19%
17% 18% 18% 18%
15%
11%
9% 10%
6%
3%
Marketing materials Homegrow n E-Procurement Generic e- Utilize a print
and services systems for overall system specifically procurement / management
purchased & management of for marketing sourcing solution service provider
managed manually marketing spend materials used

Source: Aberdeen Group, August 2007
Utilizing a managed services provider (essentially a business process outsourcing
provider) usually means that a contracted third-party manages the end-to-end
process of purchasing marketing materials. Although this sort of service traditionally
involves printed materials, providers are expanding their services to include creative
support, document reproduction and proofing, post-production inventory
management, and logistics (including direct mail services).
Regarding technology capabilities that are more specific to managing marketing
materials, Figure 9 shows the extent to which certain automation capabilities are
being utilized. For example, research shows that enterprises are showing significant
interest in improving their workflow capabilities, both between buyers and
suppliers, as well as internally. This capability goes along with the collaboration
theme. Also, enterprises are looking to gain the ability to measure and track
supplier performance and compliance (38% and 36%, respectively).
Additionally, research showed that a higher percentage of the Best-in-Class
companies have these capabilities in place already.
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Figure 9: Current and Planned Implementation of Various Capabilities
Best in Class
Currently in Place Partially in Place Plan to Implement
Currently in Place
Approval w orkflow for marketing materials 24% 23% 34%
46%
Ability to measure performance of suppliers
20% 31% 38%
(e.g., lead-times, pricing) 50%
Mailing and data management solution 19% 17% 29% 44%
Online proofing 18% 27% 29% 30%
Change order audit trail17% 21% 26%
32%
Ability to monitor and enforce internal 16% 35% 36% 39%
compliance w ith negotiated supplier agreements
Collaborative w orkflow capability 11% 26% 34% 29%

Source: Aberdeen Group, August 2007

Aberdeen Insights – Understanding Marketing
Marketing is typically differentiated into two major buckets: above the line
(ATL) and below the line (BTL). ATL is used to describe traditional marketing
activities that do not require a direct response but instead build awareness of
goods or services (including television, radio, posters, and press). BTL is typically
non-media advertising or promotions where commission has not been paid to the
advertising agency (including direct mail, point of sale displays, and printed
collateral).
The ATL activities are typically more difficult to address and cannot work using
standard sourcing procedures, thus a more tailored approach is needed. If
enterprises conduct ATL marketing, media space acquisition is likely to be a large
portion of the budget and can result in significant savings. Also, creative service
providers often provide more standard services (such as print production) and
often tack on sizable margins. A good approach with ATL marketing spend is to
separate various activities (such as creative services) from print production, thus
close collaboration is needed with marketing.
According to a vice president of marketing for a large consumer products
company, "We recently consolidated our media planning and buying to improve
the effectiveness and efficiency of our global spend. We see this an as opportunity
gain economies and media leverage"

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Chapter Three:
Required Actions
o matter the level of spend on marketing materials and services, Fast Facts
enterprises should develop a strategy to gain further control of this spend
– 50% of Best-in-Class
N category. Although this is a complex area of spend that certainly needs companies have
marketing expertise, there is a substantial opportunity to involve procurement and
instituted collaboration
for the two functions to work together. Below are some recommendations that will between procurement
help enterprises improve management of this category of spend:
and marketing
Laggard Steps to Success – 60% of Best-in-Class
companies have
" Assess and map out current processes for purchasing the various rationalized their
categories of marketing. Before developing a strategy around marketing marketing supply base
spend, it is critical to understand the current process through a combined effort
between procurement and marketing. How much is being spent on this
category? Who are the suppliers? How is that relationship managed? How many
people have the ability to purchase marketing materials and services?
" Understand the key market dynamics for each marketing sub-
category. For an effective spend management strategy to work within the
marketing category, it is critical that procurement understand the market
dynamics behind the various marketing sub-categories. For example,
understanding the fee structure of an agency is critical because a lot of the
charges are service or production related.
" Encourage collaboration between procurement and marketing
groups. Instituting this collaboration is something approximately 50% of Best-
in-Class enterprises have done (while only 13% of all other enterprises have this
collaboration in place). Often the procurement group in charge of the marketing
spend category has come from a marketing background. For this collaboration
to work, procurement must improve their knowledge of the marketing business,
and ensure clear role and goal definition and prove that their value-add goes
beyond cost savings.
Industry Average Steps to Success
" Initiate an RFP process for each category, or a combination of
categories, depending on the suppliers' capabilities. Create a short list
based on internal requirements and evaluation, and then invite these vendors to
an RFQ process. Due to marketing suppliers' misconceptions about sourcing
activities, be sure to educate and communicate the sourcing process and plan
(i.e., more than just cost cutting). Sixty-seven percent of Best-in-Class
companies go through this process, versus 20% on average.
" Identify the current marketing suppliers and optimize this supply
base. Often enterprises have too many suppliers of marketing materials and
services. In order to gain control of this category, rationalization is critical.
Almost 60% of the Best-in-Class enterprises have rationalized their supply base
in this category, versus 24% on average. It is important that marketing work
with procurement during this process so that the resulting list serves as a
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dependable network of approved suppliers that can be utilized for all marketing
needs.
" Consider utilizing a technology and/or managed service provider.
Procurement/sourcing solutions that cater to the special needs of this category "Although at first we were
can certainly add significant value in terms of more streamlined processes and hesitant to involve
enhanced spend visibility. Third-party expertise can be used to augment internal procurement in our
competencies by providing sourcing, procurement, and marketing experts. In marketing activities, we
addition to the current suppliers of marketing, these providers often have their realized the value they bring
own network of suppliers which are evaluated and measured consistently. and are now considered an
extension of the marketing
" Consider implementing collaborative workflow capabilities. Such group."
capabilities will allow buyers and suppliers as well as internal collaboration - VP of Marketing,
around specifications, quotes, and costs in a more automated fashion.
Large Consumer
Approximately 30% of the Best-in-Class have this capability in place, compared Goods Manufacturer
to 5% of other enterprises.
Best-in-Class Steps to Success
" Track savings captured and formulate a plan for realizing savings or
reinvesting into other marketing areas. While savings generation is key, it
is just as important to track these savings to ensure that they are captured (the
result being budget cuts). Once captured and confirmed, investment into other
marketing opportunities can be pursued - something that should be agreed
upon between procurement, marketing, and finance prior to the exercise.
" Measure and report on savings, performance, and compliance with
contracts. Establishing a method for measurement allows enterprises to
continuously benchmark program performance. It is also important to track
realized savings for allocation purposes as noted in the previous bullet. Active
communication about program benefits, training, and updates is also a key to
participation and involvement from internal stakeholders.


Aberdeen Insights - The Marketing Materials Supply Chain
Marketing's objective is creating opportunities, customer satisfaction, revenue
generating activities, product and service messaging, etc. (a lot of which is done
via printed materials, branded merchandise, direct mail, creative/marketing
services and media space). Procurement and supply chain, on the other hand,
are tasked with cost reduction and efficiency, supplier performance
measurement, coordination of activities from suppliers to customers (including
developing optimal inventory strategies), ensuring product availability and on-
time delivery, etc.
The development of marketing materials has numerous sub-processes:
" Budgeting and Planning
" Design and Review
" Production (including Localization)
© 2007 Aberdeen Group. Telephone: 617 723 7890
www.aberdeen.com Fax: 617 723 7897Marketing Materials and Services Spend
Page 18


Aberdeen Insights - The Marketing Materials Supply Chain
" Distribution
" Performance Measurement and Reporting
Additionally, there are numerous moving parts to the marketing materials supply
chain that require co-ordination and collaboration such as agencies, writers,
marketing departments, public relations, print buyers, fulfillment, warehousing,
logistics, etc.
We believe that an effective way to manage this process is to view it as an
extended supply chain to ensure visibility throughout the process and to
maintain acceptable levels of both quality and cost.


© 2007 Aberdeen Group. Telephone: 617 723 7890
www.aberdeen.com Fax: 617 723 7897Marketing Materials and Services Spend
Page 19


Appendix A:
Research Methodology
etween July and August 2007, Aberdeen Group examined enterprise spend
on marketing materials and services, including the experiences, and intentions
B of mor e than 270 enterprises in a diverse set of enterprises across the globe.
Responding executives completed an online survey that included questions designed
to determine the following:
" Strategies for managing the spend of marketing materials and services
" The structure and effectiveness of existing structures and technology
" Current and planned use of tools, technologies, and strategies for managing
this category of spend
Aberdeen supplemented this online survey effort with telephone interviews with
select survey respondents, gathering additional information on marketing materials /
services spend strategies, challenges, and results.
The study aimed to identify emerging best practices for managing marketing
materials / services spend and thus provide a framework by which readers could
assess their own management capabilities.
Responding enterprises included the following:
" Job title/function: The research sample included respondents with the
following job titles: Manager (38%), Director (24%), Vice President (11%),
Staff (8%), Consultant (6%), CEO / President (4%), as well as others. Job
functions included Procurement (66%), Marketing (14%), Finance (5%), and
other areas.
" Industry: The research sample included respondents industries such as
Finance / Banking / Accounting (15%), Retail (14%), Manufacturing (12%),
High-Technology / Software (12%), and many others across 24 other
industries.
" Geography: The majority of respondents (63%) were from North America.
Remaining respondents were from the Europe (19%), and Asia-Pacific (15%)
with rest of world being 4%
" Company size: About 57% of respondents were from large enterprises
(annual revenues above US$1 billion); 32% were from midsize enterprises
(annual revenues between $50 million and $1 billion); and 11% of
respondents were from small businesses (annual revenues of $50 million or
less).
Solution providers recognized as sponsors of this report were solicited after the
fact and had no substantive influence on the direction of the Marketing Materials and
Services Spend report. Their sponsorship has made it possible for Aberdeen Group
to make these findings available to readers at no charge.

© 2007 Aberdeen Group. Telephone: 617 723 7890
www.aberdeen.com Fax: 617 723 7897Marketing Materials and Services Spend
Page 20


Table 7: PACE Framework Key
Overview
Aberdeen applies a methodology to benchmark research that evaluates the business
pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in
specific business processes. These terms are defined as follows:
Pressures – external forces that impact an organization's market position,
competitiveness, or business operations (e.g., economic, political and regulatory,
technology, changing customer preferences, competitive)
Actions – the strategic approaches that an organization takes in response to industry
pressures (e.g., align the corporate business model to leverage industry opportunities,
such as product/service strategy, target markets, financial strategy, go-to-market, and
sales strategy)
Capabilities – the business process competencies required to execute corporate
strategy (e.g., skilled people, brand, market positioning, viable products/services,
ecosystem partners, financing)
Enablers – the key functionality of technology solutions required to support the
organization's enabling business practices (e.g., development platform, applications,
network connectivity, user interface, training and support, partner interfaces, data
cleansing, and management)
Source: Aberdeen Group, 2007

Table 8: Competitive Framework Key
Overview

The Aberdeen Competitive Framework In the following categories:
defines enterprises as falling into one of the Process – What is the scope of process
following three levels of practices and
performance standardization? What is the efficiency
and effectiveness of this process?
Best-in-Class (20%) – Practices that are
Organization – How is your company
the best currently being employed and currently organized to manage and
significantly superior to the Industry
optimize this particular process?
Average, and result in the top industry Knowledge – What visibility do you
performance.
have into key data and intelligence
Industry Average (50%) – Practices that required to manage this process?
represent the average or norm, and result
Technology – What level of
in average industry performance. automation have you used to support
Laggards (30%) – Practices that are this process? How is this automation
significantly behind the average of the integrated and aligned?
industry, and result in below average Performance – What do you measure?
performance How frequently? What's your actual
performance?

Source: Aberdeen Group, 2007
© 2007 Aberdeen Group. Telephone: 617 723 7890
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Page 21


Table 9: Relationship Between PACE and Competitive Framework
PACE and Competitive Framework How They Interact