By: Sarah Scudder
No one reading this article needs to be told that procurement – like every other business function – has been impacted by the rapid evolution of digital technologies. The “digital transformation” of procurement has become the topic du jour at industry conferences and a central focus of numerous recent research studies.
Of course, the use of technology in procurement isn’t new. Specialized procurement software applications started appearing in the mid 1990s. But clearly, the development of procurement-related technologies has accelerated in recent years, and it shows no signs of slowing down. For example, one of the current hot topics among procurement industry pundits and thought leaders is how artificial intelligence and machine learning can (or might) be used to improve the effectiveness and efficiency of procurement.
No part of the procurement function has been unaffected by digital technologies, but marketing procurement has been impacted more than most other areas. That’s because digital technologies affect procurement in two ways.
First and most obviously, digital technologies usually change how companies buy. Put differently, the adoption of digital technologies will typically change the activities and processes that the people in the procurement function use to perform their work.
Technological Developments Change What Companies Buy
Technological developments can also change what companies buy, and these types of technological innovations have had a major impact on marketing procurement. Largely because of digital technologies, the practice of marketing has changed dramatically over the past several years, and that evolution has fundamentally changed the kinds of products and services that marketers require to achieve their objectives.
The explosive proliferation of marketing technology tools has been widely discussed and well documented. For example, the inaugural (2011) version of Scott Brinker’s marketing technology landscape graphic contained about 150 solution providers. The 2019 version of the landscape graphic includes 7,040 marketing technology solutions.
The expanding role of technology in marketing means that marketing leaders are now making substantial investments in technology tools and related services. In 2012, Gartner predicted that by 2017, a company’s chief marketing officer would be spending more on technology than the company’s chief information officer. This prediction created quite a stir when it was made, but research by Gartner in 2016 found that the prediction was on the cusp of becoming a reality.
Two research studies published earlier this fall demonstrate how significant marketing’s investment in technology has become.
- The Annual CMO Spend Survey 2019-2020 by Gartner found that on average, marketers are spending 26% of their total marketing budget on technology. To put this in perspective, the Gartner research found that on average, marketers are spending as much on technology as they are on media, and they are spending more on technology than they spend with agencies (26% vs. 22%).
- The Martech: 2020 and Beyond survey by WARC and BDO produced similar results. It found that on average, firms in North America and the U.K. will devote 26% of their marketing budget to technology in 2019, up from 23% of the budget in 2018. North American companies are investing even more. On average, those companies will spend 30% of their marketing budget on technology this year.
These research findings may not capture the real total spending on technology by marketers because many of the products and services acquired by marketing now have an embedded technology component. Even some purchases of printed marketing materials are now enabled by a variety of digital technologies.
For example, many companies are now using so-called web-to-print solutions to acquire some printed marketing materials. These solutions typically provide online “storefronts” through which authorized users can order printed materials, and many also include personalization technologies that will enable authorized users to customize materials in controlled ways. Web-to-print solution providers will combine these technology components with print manufacturing capabilities and fulfillment services to offer a more comprehensive print supply chain solution.
Many agencies and other marketing services providers are also combining technological capabilities with traditional services in order to provide broader solutions, which means that the tentacles of technology now reach a large portion of external marketing spend.
What This Means for Procurement
The growing dependence of marketing on technology, and the dynamic, ever-changing marketing technology landscape mean that marketing leaders will need to acquire and implement technology tools on a regular basis. Therefore, marketing procurement professionals will need to become proficient at sourcing technology products and services, particularly cloud-based, SaaS solutions, and they will need to hone their skills at evaluating products and services that have critical technology components.
Sarah Scudder is the President of Real Sourcing Network (RSN), a print e-sourcing tool software company, as well as the CEO and founder of the Young Innovators Group. Sarah leads the annual Young Innovators National Conference. Sarah writes a monthly column on print and marketing services procurement for the Sourcing Industry Group (SIG) and Print+Promo.