Part 1 of 5 in the Sweet Spot Framework series.
Living with a traditional “savings-only” mentality in marketing procurement is a painful place to be.
I’ve been to too many industry conferences where agencies, procurement, and marketing all bemoan the current state of tension between the three parties. Everyone agrees it’s broken. But with the way most procurement teams are KPI’d (predominantly cost savings), we all find it difficult to articulate a pragmatic path forward.
The root cause isn’t complicated. In many organizations, marketing procurement is incentivized by a dominant KPI: cost savings. This “savings-only” mindset treats cost reduction as the critical goal, overshadowing other outcome-focused metrics like creative quality, brand performance, and strategic value.
In most other categories of spend, cutting costs is pretty much always a win for the organization. Need the same office supplies for 15% less? Great. Renegotiated your logistics contracts? Fantastic. But marketing is fundamentally different. In marketing, this approach can end up hurting all three parties.
What It Does to Marketing
For marketing, underfunded projects lead to rushed work, limited exploration, and diminished quality. Marketers are left frustrated, unable to achieve their brand goals and deliver the results their campaigns demand. It can also be difficult to attract the best agency talent to work on their business. When agencies know your account is under-resourced, the A-team goes elsewhere.
What It Does to Agencies
For agencies, the pressure to lower fees forces them to make compromises, such as using less experienced talent, reducing time spent on projects, or prioritizing volume over quality. This diminishes their ability to deliver their best work. And here’s the part that rarely gets discussed: agencies aren’t charities. When margins get squeezed too hard, the quality of people assigned to your business quietly drops. You won’t see it in the pitch deck. You’ll see it in the work.
What It Does to Marketing Procurement
And for marketing procurement, they’re forced to prioritize cost-cutting over optimizing outcomes. This undermines their ability to act as strategic partners and erodes trust with both marketers and agencies. Procurement professionals end up as the villain in a story none of them signed up for.
The Vicious Cycle
A “savings-only” approach creates a vicious cycle of inefficiency and dissatisfaction. Campaigns underperform, trust breaks down, and all parties are left struggling to meet their objectives. Marketing blames procurement for starving their campaigns. Procurement points to the savings targets they were given. Agencies quietly absorb the damage until they can’t. The cycle repeats.
It’s clear that there must be a more productive way forward. The good news? There is. It starts with changing how we define success for marketing procurement, and that’s what this series is about.
Next in the series: why “spending wisely” and “spending less” are not the same thing, and how a framework built on the Law of Diminishing Returns changes the conversation entirely.