Aligning Marketing and Purchasing Teams to Reduce Advertising Overspend


By Karel Schindler

2020 was the year of significant change in the retail industry. Online retail witnessed a significant boom as consumers were subject to lockdowns and unable to travel to the physical stores. It’s a change that looks unlikely to completely switch back over the coming years, meaning retailers are pivoting towards digital channels to keep sales strong.  

The urgency to tap into online channels and remain competitive is however leaving retailers more prone to risks, such as overspend and subsequent wasted advertising budget. Research from ROI Hunter’s work with hundreds of retail clients with billions in spend has found that 50% of dynamic advertising impressions tend to be spent on just 1% of the product portfolio. Exacerbating the issue is the fact that retailers don’t have control over which 1% of products that is. 

For the C-suite, and particularly Chief Marketing Officers (CMOs), it’s critical to ensure that allocated budgets are better utilised. Yet, challenges around resource allocation remain a blocker, particularly when it comes to management of marketing and purchasing teams and advertising spend. 

The modern challenges facing the CMO 

A survey of marketers worldwide in 2018 discovered that an average of 26% of budgets are wasted on ineffective channels and strategies. In sectors where margins are getting smaller, such as fashion, this is becoming an even bigger issue due to the fact that thousands of brands are typically competing for purchases. 

Digital marketing teams face challenges due to the number of channels now available. In organisations with an extensive product range, simply deciding on which products to promote is an issue in and of itself. This is compounded by the fact that product data is in disparate silos across organisations, resulting in teams that lack knowledge about the operations of other departments. Marketing is unable to use data about purchase price to inform their campaigns, and purchasing teams are prevented from knowing how well a product is really performing when making reorders, due to not knowing the ad spend behind each sale. 

For CMOs, this means a lack of alignment between marketing and purchasing: without visibility, marketing may promote discounted items over new arrivals, hurting margins and increasing turnover length. Purchasing may respond to poor sales of a product with a price decrease, not knowing that the real issue is lack of promotion. Without alignment, the two departments can’t share any important KPIs, such as profitability, making overspend all too common. The lack of collaboration between marketing and purchasing is therefore an urgent issue that CMOs need to address.   

Aligning data and teams 

To optimise digital ad spend and eradicate the potential for overspend, CMOs need to ensure that their departments are aligned around the same source of cross-channel product performance data. Beyond alleviating the issues mentioned above, this data can be used by marketing to inform promotional planning, and by purchasing to improve demand forecasting. Digital marketing and purchasing departments typically use customer data to help shape strategies, but may not have considered the value provided by product data. 

CMOs may already be encouraging teams to gather and combine insights from Meta and Google at scale, but it requires a significant number of API calls to extract data from these platforms, and Meta only allows for 200 API calls an hour. This strategy also requires teams to have the ability to build their data sets, know which data exists, and know why they need it, how to retrieve it, and how to model it into something that’s usable. Constant maintenance is also required, which is a time-consuming, manual process. Even just using Google’s Enhanced Ecommerce to see product performance per Google Analytics requires a team of data scientists to analyse, pull, and import the information. 

In order to gain these insights and drive greater performance in a truly scalable way, retailers need an automated way to regularly sync product data from across their channels.  The simplest and most logical way for CMOs to accomplish this is via adoption of a Product Marketing Platform (PMP). Similar to how CRMs are used to organise customer data, PMPs focus on collecting and integrating product performance data, such as ad spend in different channels, number of transactions, margin or generated revenue. 

Collaborating for the better 

Connecting data streams in this way adds the visibility into performance that’s currently missing from dynamic campaigns, and helps eradicate silos across departments. With access to margins, return rates, cost of goods sold and stock level figures from purchasing, marketing teams know which products are a priority for the category managers, such as those at risk of becoming deadstock and can shift focus accordingly. Information about brands, categories or even individual products can be accessed, empowering marketers to automate promotions and report the cost of promotion per product in real time. 

On the purchasing side, teams can access marketing data around campaign spend, ad sets, the number of campaign impressions and return on ad spend. This allows them to understand the precise visibility and marketing performance of each product, including the promotion cost associated with individual item sales. Information about the spend per item can highlight difficult-to-sell products. More accurate forecasting decisions can be made, helping to reduce overspend.  

With each team empowered by access to the same comprehensive dataset, CMOs benefit from overarching visibility over Meta, Google Analytics and Google Shopping product performance data in one central location. This means everyone can sing from the same hymn sheet, and more precise data-driven campaigns can be devised, allowing for optimisation of budgets.  

Ensuring cross-team collaboration 

Increased market competition, the introduction of new regulations to limit the value of customer data, and consumer financial restraints are creating a perfect storm. The C-suite, and specifically CMOs, need to ensure that marketing and purchasing departments are truly aligned to achieve business goals and KPIs. By enabling collaboration through the synchronisation of data, retail leaders can better utilise their budgets and reduce overspend. Without this, retailers will continue to waste money promoting products that provide little revenue, and underspend on products with true, data-driven potential. 

About the Author 

Karel Schindler

Karel Schindler is the Chief Executive Officer at ROI Hunter. Karel built ROI Hunter from the ground up, coining and creating a new marketing strategy that entails integrating product-level data from any source to give retailers visibility and control over what products are promoted by Facebook and Google. 


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