John Butcher discusses the role procurement can play in ensuring the CMO and CFO can attain control over digital expenditure.
The secret is out – up to 60% of digital marketing spend is wasted and, as a result, failing to deliver the promised ROI. From bots to viewability, fraud to simple confusion, in the worst case just 40% of digital investment is reaching its target. So what’s next for marketers – most of whom have enjoyed a good decade of digital excitement, enticing the CFO with promises of unprecedented measurability? As the business increasingly wakes up not only to the lack of digital ROI but also the on-going disconnect between digital activity and business objectives, it is clearly time for new thinking.
One of the biggest problems facing marketing is, ironically, a lack of digital transparency. Despite digital’s promise of delivering unprecedented measurability, the truth is that significant money is being wasted due to poor transparency. It is through this opacity that ineffective marketing spend, fraud and wastage occurs and that makes CFOs more sceptical.
Much of this wasted investment occurs across the diverse number of specialist agencies, brokers and intermediaries that have been commissioned by companies unsure how to progress against a backdrop of media fragmentation and huge shifts in connectivity, attitude and behavioural changes.
This is not just about money; with opaque campaign metrics and a lack of control, especially in a multi-agency model, companies are also incurring longer term risks, including damage to both brand and share price. While agencies are attaining massive digital profits clients are left bearing the burden of risk. This model can only change if marketers and CFO’s work together to take a more savvy approach to digital marketing.
By building communication and collaboration across the business, from marketing to finance, there will be a far better understanding of the overall commercial goals and the way in which different aspects of the digital marketing mix can support those goals. Secondly, taking these objectives to an agency or agencies and developing a new, workable relationship should deliver better value.
Collaboration between these internal functions and external parties is crucial and that’s where procurement can step in. It acts as the linchpin, free from functional parochialism between all sides of the buy/sell equation, to manage the internal goal alignment and external goal setting with agencies, enhancing transparency and control. Procurement can also assist with setting relevant KPIs that measure appropriate inputs, outputs and impact, to ensure all digital activity is working toward wider business goals and priorities.
Working with procurement, CFOs gain better understanding over how money is being spent, how commission structures work, the risks associated with digital marketing partners, and where the brand is appearing.
Gaining control over this increasingly important, yet technical, area of business requires better transparency into spend and a closer working relationship between finance and marketing. This cross functional view will ensure that marketing budgets are being spent on delivering corporate aims, not just marketing objectives.
John Butcher is the marketing services director of Proxima.