Fabian Heinrich: Hello everyone. I'm very happy to welcome you to a new episode of Procurement Unplugged. Today I'm very proud to have our first guest from the US, Sarah Scudder, who's a true expert in the procurement of marketing services. So, hello and a warm welcome from our side Sarah.
Sarah Scudder: Thank you. Honored to be the first US guest representing. I'm joining from the San Francisco Bay Area. So beautiful, warm, sunny weather today.
Fabian Heinrich: Thank you. Sarah, I mean it's always a funny story a great story how people ended up in procurement. So, what was your story?
Sarah Scudder: So, my story was very random and unplanned. I think as most who wind up in procurement. So, I was planning to actually go into the fashion industry. I did runway modeling in high school and fell in love with the fashion industry and had thought that someday I actually wanted to own my own runway production company. So, my plan was after college. I wanted to go work for a company that produced fashion shows either here in the US or globally, get some experience, make my connections, and then eventually I was planning to open my own company.
My senior year in college, I had just finished serving as president of my sorority which is Alpha Gamma Delta. And I figured I've got one semester left, kind of my last hurrah, I decided to co-chair our big fundraising event, which was called Lip Jam. The purpose was to raise money for our philanthropy which was diabetes. The goal was that all of the fraternity chapters would do a fundraiser. We raised money. We donated it to national and then we would make a significant contribution to diabetes research. So, myself and one of my sorority sisters decided we were going to take it on and coordinate the event.
Well, I had a full-class load. I was a double major, had a minor, and I had never ever had experience procuring marketing related services and goods. So, when we started jumping into all the planning for the event, I decided to hire a local company in Sonoma County Wine Country which is where I went to school, to take care of sourcing and procuring everything marketing related for our event. So, that included all of our media, all of our printed materials, all of our promo and swag, all of our apparel. And after the event which was a huge success, we had raised more than any other event before. Which was so awesome.
The company that I had hired to do all of this offered me a job. Now, I was still in college. This was completely opposite of the fashion industry, but I decided to spend a little more time with the team. I had worked with them for several months, so I had gotten to know their culture and kind of how their business ran. And I actually decided to take the opportunity and the reason I did is I am very entrepreneurial. I love technology. I love marketing and I figured that someday, I may want to have my own business or be able to build out a team at a larger company and what better way to do that than getting in at a very very small company, and learning all aspects of the business.
So, right after I graduated, I started at this local company at the time was called Golden Pacific Systems. And that was my entry into the marketing procurement world.
Fabian Heinrich: Wow, I think that's certainly another like truly unique and amazing story, how to end up in procurement. So, you mentioned in your first very interference with procurement that you like already had to take a different types of marketing services like printing, branding, PR and so on. I mean, first and foremost, what do you think is so different between traditional materials, procurement and marketing procurement. And then my question would be what are the differences within marketing. Because many people just think that marketing service procurement but I think within marketing there are also like huge differences, right.
Sarah Scudder: Yeah so, I'll start with why I think marketing procurement is so different and unique than any other procurement category. So, marketing procurement is often done on behalf of the marketing team. And people in marketing are very sales and revenue generation focused. They are not focused on cost savings and cost reduction. So, when I'm the chief marketing officer or running a marketing team, I'm given my budget for the year. That is the budget that I have and I'm not constantly going out trying to figure out how I can cut my costs and cut the amount of money that I'm spending. I have my budget and that's what I'm going to use for the year.
So, marketing procurement is not focused on cost reduction and cost savings and historically, that is what procurement professionals do. They will come in and really focus on how to drive cost out of the spend category or out of a program. Marketing procurement is really focused on innovation and value add. How can, what it is that we're procuring help build the brand of the company? How can it better the customer experience, and how can it increase sales? So, it's not about cost, it's about revenue generation and grow the bottom line.
Fabian Heinrich: I think that's a super interesting topic what you're saying. Because I think like usually the procurement guys are only like the bad guys coming in for cost sakes and so on. Actually, the role with the marketing what you just described is completely different. Because all of a sudden procurement becomes a value driver. Because I think like in the collaboration, this procurement you need to understand that you need to look beyond your budget and understand the value you can capsulate from a proper procurement process. So, that's I think like a fundamental point that in that regard procurement is a value driver.
Sarah Scudder: Yeah, so marketing procurement is all about going out studying the market, finding new creative, innovative solutions, new ways of doing things and bringing that back to the marketing team. So, they can assess and determine if that's something that's going to benefit the organization. And I think it's so important if you are in marketing procurement to remove cost savings or cost reductions completely out of your vocabulary. It shouldn't be something that comes up in meetings or comes up in presentations.
Now, it can be the byproduct of coming and finding an innovative solution, solution that adds value or/and provides automation. But you do not want that to be the leading factor or force when you're meeting with stakeholders and trying to get alignment and do your internal sales process. So, just completely different mindset. I will say that the marketing spend is often in the top three biggest spend categories at a company. So, it is a significant spend. One of the things that I'm seeing a big shift in the market in the last couple years is companies creating marketing procurement positions for the very first time.
So, often, historically, somebody in procurement would be assigned marketing, marketing wants nothing to do with procurement, procurement ignores the marketing spend completely and just as going out and focusing on their other categories. But now, companies are seeing how much money they're spending on marketing and they're actually creating marketing procurement roles where the person actually sits on the marketing and the procurement team. So, it's a hybrid position which is really, really focused on collaboration. I see companies that do that well are having pretty incredible results with putting in contracts and innovating and working with suppliers and as a byproduct, saving time and money.
Fabian Heinrich: Yeah, I mean like you mentioned a lot of interesting things like the position of the category buyer for marketing services, but also how has it been changing over the years. So, I mean you've been for quite a while the marketing procurement world. What we seeing are the three main changes over the last 10 years?
Sarah Scudder: Yeah, and before I address that question, you had also asked me what are the different major buckets within marketing procurement?
Fabian Heinrich: Exactly.
Sarah Scudder: I want to sure that I touch on that for the listeners. So, there's a few major buckets that fall within marketing procurement and the first and what's historically been the largest is the Media Spent. So, that's what a company is spending on commercials on advertising. Then the second is going to be what I call Digital Marketing. So, things like SEO, things like paid ads. Then, you've got your agency and creative spend. So, when you're going out and working with firms to help with the creative process. And then, you have something which is really, really fast growing and is often now becoming number one or two and that is called Martech.
Martec means Marketing Technology. There has been a huge surge of new companies creating marketing procurement technology. So, the landscape has grown substantially in the last few years about how many different Martech platform are available in the market. But that's actually the procurement of marketing technology. So, a lot of times now, people in a marketing procurement role are kind of like IT sourcing professionals. They're spending a significant amount of their time actually buying technology that the marketing team is going to use. So, really important focus, really important part of that category.
And then, you've got the other two which is I have spent a lot of my career and that is in the print and packaging space. So, while some people may think print is dead, print is dying, nobody prints anymore. Print is a significant spend for many companies. We're talking hundreds of millions of dollars in some cases. And then you've got another bucket which is fast growing. If you are a company that's selling products to the end consumer and that is packaging. And with the rise of COVID and the shift in how people are living and consuming, people are spending so much more money now online instead of going into brick and mortar.
As we consume more online, that means companies have to buy more packaging. And often, marketing is heavily involved in packaging, because it's a really important part of the branding process. How your packaging looks and feels, can make or break web your product is successful. So, those are some of the major buckets that fall within marketing procurement that I think are just important to note.
Fabian Heinrich: Yeah, I think that was a super interesting kind of classification of the different buckets, but I mean like given that you have experience in that topic. I mean do you really think like in the first categories you mentioned like the media spend and the kind of advertising money on like digital Marketing, procurement can drive value here? Or would you say procurement could completely disregard those topics and only focus on let's say the creative agency spend, the Martech and the printing and marketing.
Sarah Scudder: Yeah, so I think marketing procurement can have add significant value in the media and advertising bucket. Because a part of that is going to be going out helping source and procure talent. So, finding the right partners to help create the media and execute it. And then also working with marketing to make sure that they have the right KPIs, which are Key Performance Indicators in place to make sure that the right talent and the right timelines are in place. And that those media partners are rewarded when top talent is assigned to the account and when timelines are met. When timelines are not met, there also needs to and repercussions and processes put in place.
So, I think from an execution standpoint, procurement can really help and add value. Then negotiating contracts with agencies. Again, procurement may not be making the final decision, but once the agency or the firm has been selected, they can add a lot of value in making sure that a good healthy contract is in place to make sure that there is a backup contingency plan as well. If something happens and goes haywire, you don't want your marketing team stuck with no secondary and third solution.
Fabian Heinrich: Okay. No, I mean that makes completely sense. Do you think in those categories are already solutions in place, so people still need to operate very manual? Because the likes of the big SAPs or other systems they're not really catering to marketeers either through marketing procurement professionals.
Sarah Scudder: Yeah so, I think the more old school Ariba Oracle type solutions do not work well for marketing procurement. I think you'll find most organizations; they're doing something else and they're not using those solutions. Now, they may be issuing a purchase order but they're not using those solutions for the exploratory and source process. So, you'll find that there are more and more niche category solutions being developed and implemented and there's a lot of those being built for marketing procurement. I mentioned Martech is one of the fastest growing categories within marketing and that's because so many niche category solutions.
So, I think procurement professionals, one of the things that they can add value is go out, look at those technology-driven solutions, figure out what's going to make most sense for your marketing team. And then look at putting something in place that will automate a lot of the manual work. That maybe being done via phone, via email, or via spreadsheet. So, I do think there is some automation that can be leveraged and value that can be added by putting in very niche technology for the marketing team. Again, this is not going to be a companywide ERP type solution. It's going to be something very specific and niche that the marketing team is going to use.
Fabian Heinrich: So, you don't believe in a big kind of procurement solution which also caters to marketing. You rather believe in a best of breed approach, yeah.
Sarah Scudder: Yeah so, I'm a very big believer in niche category solutions are really what's going to drive value and meet the needs of the businesses. One solution can't solve every category spend need and serve every single stakeholder. So, I think there's a of value in going out and finding niche solutions that make sense for that team or that department. And then the key is having some central way to integrate them all to centralize purchase orders, to centralize invoicing, and to centralize the data piece. I mean, data is so important. You need to have clean good data, so marketing can assess and look at how they're spending their money and pivot and make tweaks as quickly as possible.
Fabian Heinrich: I mean talking about niche solutions you mentioned earlier that your expertise comes in with regards to the printing and packaging. Maybe you can tell our listeners a bit more about the key challenges with regards to the procurement of printing and packaging.
Sarah Scudder: Yeah, so about three years ago I joined a startup called Real Sourcing Network. We go by RSN. I run our growth strategy and marketing. And we're a technology provider that has a very niche sourcing solution for print and packaging. So, some of the big challenges that I've seen in this particular space is, one, old-school thinking and old-school mindset. I've been buying my print from the same manufacturer for 20 years. They do a great job. I know the owner. I know their kids. I know their family. So, I have no interest in changing or looking at something new.
So, there's a lot of legacy, very very long-term relationships between a printer and their clients. And that's a challenge because in the last 20 years, there's been significant advancements and changes in the industry. If you as a company are not looking at what's new and what's innovative, your competitors will be and it could cause them to significantly pass you by. And you can lose revenue and you can lose clients from it. So, that's the big challenge is, the old-school mindset, people not really being open to look at or even consider something new for this category.
Another challenge is its tail spend. It's something that people don't really think about. If you spend a billion dollars on media and your print spend is $5 million dollars, where are you going to spend your time and resources on the billion dollars? And so, because print and packaging often make up a much smaller percentage of the total spend category, it's ignored. So, whatever the companies been doing, they just keep doing. Instead of going and spending some time and resources looking at what they're buying, is it efficient? Is there a better way to do that? So, those are two just things that we see constantly coming up over and over again.
On the plus side, I think sustainability is something that's really become a focus point this year. I think because of COVID, so many people are home and they're seeing how much waste that they're generating. And you're seeing a lot of consumers, me included, I'll take pictures if somebody sends me really wasteful packaging. I'll post it online. I'll tag the company. You know, was it necessary for you to ship this pen in a refrigerator-sized box. And so, because consumers are really kind of posting and demanding and talking about it. Companies, some companies are saying, yeah, we probably need to look at a different solution.
So, one of the things that my team and I are really focused on is sustainable packaging. So, we help company source and procure print. We also help companies source and procure packaging.
Fabian Heinrich: And what are the key topics for you? What are the key points for you like to really enforce sustainable packaging?
Sarah Scudder: Yeah. So, the first thing is a company needs to have executive buy in if they're going to change to sustainable packaging. And a manager at a company is not going to be able to drive the change, has to be an exact Leadership decision. The company is going to invest in sustainable packaging and they're going to assign the appropriate resources to do that. It's really, really important, and often this is driven by marketing. So, the chief marketing officer says, we want sustainable packaging. We're going to incorporate it in all of our messaging. We're going to put it on our website. We're going to print it on everything, because we feel we're going to get new consumers because of it and we're going to be able to satisfy our existing consumers.
So, really really important part to get that buy in and have it be driven by marketing, so they understand the value of doing it or it won't go very far. So, once a company comes to the realization that they want to consider a change and looking at sustainable packaging. It's really important to look at the weight of your packaging and making sure that your packaging, your products still get to the consumer without being damaged. So, the most unsustainable thing you can do is have your product be damaged and transport. Because then, you have to reship a new product and buy and use more packaging material. So, you want to make sure that your product is getting to the consumer without being damaged. Really, really important.
You also want to make sure you're minimizing returns again because that's requiring extra packaging and impacting more of the carbon imprint. So, after those two things are under control, minimizing returns getting your product to the consumer without being damaged, you want to look at how you can minimize the weight of your packaging. Lighter packaging is more sustainable and lighter packaging is cheaper, because you're lowering your transit cost. So, if I look at my hydro flask here which I use obsessively every day. If there's a way that I could reduce the weight of the packaging that this gets sent out in by 50%, imagine what that's going to do from a freight and transit perspective. It's going to significantly reduce costs that are associated with transporting that product. So, those are some key important things that brands need to look at.
The other thing from a messaging perspective is you want to very clearly print on your packaging how a consumer supposed to dispose of it. So, one of the challenges is you get packaging, you remove your product, then, how do you know what to do with it? Should it be thrown in the trash? Does it go in the recycling? Is it something that's biodegradable and should go in your compostable? So, there's all these different factors where even somebody like me who's in the packaging industry, a lot of times, I don't even know how to dispose of packaging. So, make sure you put really clear, simple instructions for your consumer about what they should do with it once the product is removed.
Fabian Heinrich: I think that's kind of very true statement here, because certainly sustainability is our global mega trend where we should all focus on. And I think that was a very clearing operational description how to execute regards to the procurement of packaging. Here already come also to my last question. I mean, you've been in the procurement of marketing for quite a while. How do you see the future? I mean, what kind of trends apart from the sustainability topic we just touched upon, you see for the future?
Sarah Scudder: Yeah so, I'll talk about packaging in particular and then I'll answer that also more generally in regards to marketing procurement. So, from packaging, I think we're going to see many more innovations coming into the market in the next couple years that are going to be completely biodegradable. Meaning once the product is removed, your packaging could go into combos and will completely disintegrate in a certain number of days or weeks. I think we're going to see more packaging become recyclable. So, instead of having to throw it away, I think more of it will be able to be put in the recycling bin.
And I think we're going to see companies really minimize the amount of packaging that they're using. So instead of filling a box with air pillows or the bubbles or other materials that are used, I think we're going to see new packaging designed that more closely fits the size of the product being shipped. So excess packaging material is not needed. In regards to marketing procurement in general, I think we're going to see a big shift to sustainability in all aspects of marketing procurement. So that means more sustainability in regards to media and agency work. More sustainability as it relates to print, logistics, transportation, more sustainability, and in working with agencies and media partners.
Then I think we're going to see significant amounts of marketing budgets be dedicated to technology. There're still companies where they're not spending a significant amount on Martech, but I think that's going to change because there's so much that you can do online with data and analytics and getting good information on your consumers. I think that's going to be the fastest spend and growth area from a marketing procurement standpoint. So, if you're interested in getting into marketing procurement, get familiar with IT procurement. Go counter people who are buying technology and other categories and learn how they're sourcing it. What are some of the important legal ramifications? What are some terms and conditions they need to know about that go in the contracts? Because that's going to be a huge part of people that are involved in marketing procurement moving forward.
Fabian Heinrich: Thanks a lot. That was a very interesting closing statement and that means for all kind of marketing people like to really focus on sustainability and technology. And the bottom-line kind of what I could hear from your speech is really driving innovation and all kind of regards, no matter whether it's packaging but also with regards to other verticals. Thanks a lot. It was a truly interesting talk. Thanks for the time. It was a pleasure having you here.
Sarah Scudder: Thanks for having me.