Start-ups on Trial: Should Marketing Procurement be Working with Start-ups?
With digital advertising tech developing faster than companies can procure it, many are turning to start-ups to work more flexibly with changing trends. The specialist knowledge and technologies they provide are allowing marketing departments to keep their finger on the pulse of digital advertising.
We surveyed 104 Heads of Marketing Procurement to find out more about this shift towards collaborating with start-ups. Here’s what we found:
The majority of our respondents have started to work with start-ups already, although the issue is a divisive one. Only 7% are working on procuring marketing services from start-ups, while 36% are still unsold on the benefits of ditching some of their big agencies.
The Case Against Start-ups
When asked why, here’s what some Heads of Marketing Procurement came back with:
"Integrating our systems with those of start-ups is a cumbersome process, and backing up and sharing data with small companies can compromise our position, so we avoid working with them."
Difficulty integrating systems was a common answer, and further to that, integrating cultures between start-ups which lack the necessary level of management. Others sited poor work culture, lack of trust and instability as major factors on the decision to stick with big agencies. The flexibility of start-ups, which is an attractive feature for some, can become a double edged sword for others, as one of our respondents reported:
"The products offered by start-ups are still under development and need to be updated continuously, which can lead to disruption or loss of data if we use their product, to avoid data loss or disruptions we avoid working with start-ups."
Many also doubted the ability of start-ups to offer cost-saving or value-adding services available from agencies:
"Start-ups do not offer the cost efficiencies we look for in a company and we have tried working with them in the past but feel they do not offer us the cost saving initiatives we are trying to achieve. Working with start-ups only exposes us to hidden costs and pushes up overall costs in the company."
The Case for Start-ups:
One major advantage of working with smaller companies is that marketers can circumvent the layers of bureaucracy when resolving issues. Being so small, they’re in a good position to have clear and open lines of communication. One Head of Marketing Procurement said,
"Because management is so compact, communication and resolving issues is quick and easy."
Focus on: Unilever
Since Unilever got rid of half their 3,000 agencies in 2017, slashing the spend on agencies by 17%, they’ve been building collaborative spaces in Ireland and Singapore. These allow marketing to work alongside up to 50 start-ups, and they’re coming for the US, Europe and Asia next.
Their plan is to dedicate more time and money to start-ups providing influencer marketing technology and user-generated-content platforms. Consequently, Unilever are producing 30% fewer ads. Clearly the company are opting for a review which prioritises quality over quantity, and they’re willing to put in the time and money to make it pay off.
Focus on: P&G
Last year, health care giants Procter and Gamble announced a dragon’s den style pitch event at the digital conference Dmexco in Germany, where 20 start-ups would state their case, and four would be in with a chance of a 20,000 euro investment.
Sophie Blum, P&G’s VP of marketing for Europe and IME explained, “We are looking forward to engaging with the brightest minds to shape the future of brand building and accelerate growth through an open innovation ecosystem.”
Working with start-ups is going to be a hot topic at ProcureCon Marketing. Make sure to download the agenda to check out all of the great activities, speakers, & sessions planned for this year.