Improving Marketing Supplier Diversity Programs - An R3 Report

IMPROVING MARKETING SUPPLIER

DIVERSITY PROGRAMS An R3 Report

DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

Marketing Procurement’s Role in Developing Diversity & Inclusion Supplier diversity programs have become familiar components of overall business thanks to heightened awareness around the benefits and advantages of developing more sustainable and inclusive supply chains.

In a recent ANA survey (2021), 69% of marketers said they had a supplier diversity program for marketing. This is up from 40% in 2020. However, 48% of these programs are 5 years old or younger.

As marketing procurement teams incorporate supplier diversity into existing agency and vendor partnership processes, unique advantages and challenges have been noted. Working with diverse suppliers encourages companies to adopt more efficient procurement ways of working. But maintaining the supplier pool and measuring short- and long-term performance demands specialization, and an ability to apply demographic data in a meaningful way.

This report is only part of a much wider conversation about inclusivity and marketing performance that we hope to have with you. There is more to be done to make supplier diversity programs more effective, efficient, and accountable in our industry. Successful programs require stakeholders to understand both business and human issues, and challenges marketing and procurement leaders to be bold in their leadership.

69%

of marketers have supplier diversity programs

Source: ANA ‘The Growth of Supplier Diversity’ (2021)

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48%

of supplier diversity programs in marketing are 5 years old or younger

IMPROVING MARKETING SUPPLIER DIVERSITY PROGRAMS

Supplier Diversity Programs Lead to Better Performance The top quartile of companies engaging diverse suppliers have...

10%

52%

7%

Higher rate of preapproved spending

Greater use of electronic purchase orders

Greater use of electronic invoicing

18%

46%

Faster requisition to order processing

Faster invoice approvals

Notes: Leaders defined as the top quartile of the sample set of companies working with diverse suppliers; peer group comprises the bottom 75% in spending on diverse suppliers; results represent the median leader and the median peer group performance data Source: Coupa Software Inc., (n>350)

Average annual retention +20% 74.0% 61.7%

Nondiverse suppliers

Diverse Suppliers

Source: Coupa Software Inc., 2017-2020 (n>17,000)

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

Tracking the Diversity Dollar 85% of U.S. companies have dedicated supplier diversity programs, and approximately 24% of diversity spend from those programs go to advertising and marketing (Oliver Wyman/Proxima, 2021).

Categories of spend include agencies (most common, with highest spend), and companies delivering production, consulting, printing, research, media, and promotion services. In the next year, marketers are expecting to spend more of their diversity budgets on production companies (vs. agencies), and media companies like television and radio stations.

Which industries spend the most diversely?

Where is diversity spend focused?

Telecommunications

11%

Consulting

Healthcare Construction

15%

Consumer Manufacturing & Industrial

17%

Technology Advertising and Marketing

Energy

24%

Financial Services

Contingent Labor

37%

Technology

3%

Source: Oliver Wyman/Proximo, (2021)

6%

9%

12%

Current and Future Spend

*Media companies are described as radio stations, TV networks, and digital media companies, not media advertising agencies

Categories with most spend Agencies

50%

Media Companies*

15%

Production

13%

Printing

13% 8%

Consulting Promotion/ promotional products

1%

Q: What specific categories of diverse suppliers for marketing/ advertising do you currently spend the most with? Select only one.

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Type of Categories Expect to Spend More With Production

69% 65%

Agencies

43%

Media Companies* Consulting

31%

Research

31%

Promotion/ promotional products

30% 24%

Printing Auditors

6%

Q. What specific categories of diverse suppliers for marketing/advertising do you expect to spend more with in the next year? Select all that apply.

IMPROVING MARKETING SUPPLIER DIVERSITY PROGRAMS

What Does Applying Diversity & Inclusion to Marketing Procurement Look Like?

Aside from the standard operating frameworks and processes used by company-wide supplier diversity programs, applying supplier diversity to marketing can include one or more of the following:

Understand the diversity policies of your agency partners.

Create space in your agency ecosystem for minority-owned and multicultural businesses.

Demand regular reporting from your diverse suppliers. Make it a qualitative and quantitative exercise.

Give minority-owned agencies the opportunity to introduce themselves and their work.

Help existing agency partners develop their own supplier diversity programs.

Reward agency partners who help your brand meet its supplier diversity goals.

Make Diversity & Inclusion criteria a standard requirement in any RFP.

Partner with minority-owned business organizations to grow your exposure to the capabilities and needs of potential partners.

Communicate supplier diversity goals and challenges with stakeholders across marketing and management.

Implement payment terms that are supportive to small and minority-owned businesses.

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DRIVING TRANSFORMATION FOR MARKETERS & THEIR AGENCIES

An Invitation to Think Intersectionally Aim beyond diversity metrics and look to develop balanced teams 2

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Be balanced with the metrics Focusing on metrics can detract from the individual impact supplier diversity programs can make in the lives of people. Data will never be able to paint the full story of each minority-owned vendor or diverse business, and it can also miss nuance and be bias. Incorporate qualitative interviewing in assessments, and where important, confirm data and trends with anecdotal evidence.

Create a culture of performance Performance means different things to different people. “Great work” might vary between a supplier that is part of a large holding company and a minority-owned boutique agency (it already varies within our own teams!).

So when developing KPIs, it is imperative that all participating partners share a vision for what is trying to be achieved. Benchmarks will need to be adapted for vendors with less resource or businesses that face greater challengers, but the spirit of building high performing teams remains the same.

“

One mistake that companies often make when they first start thinking about D&I is that they don’t think intersectionally. Each of your employees has layers—lots of different identities. And when many companies start thinking about diversity they say, ‘diversity equals more women.’ And that’s a great intention, but sometimes that means you don’t think about different groups of women within that group. You only build programs that speak to straight white cisgender economically privileged women.

But when you start to think beyond “meeting diversity metrics” and start to think about building balanced teams, those are potentially your strongest opportunities for impact.

Aubrey Blanche Global Head of Diversity & Belonging Atlassian

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”

IMPROVING MARKETING SUPPLIER DIVERSITY PROGRAMS

Case Study: Verizon Increasing diversity across the creative supply chain Objective Verizon spent nearly $5.7 billion in 2020 with diverse suppliers. They are committed to increasing diversity and equity in both representation and economic investment across their supply chain and believe that diverse businesses create the greatest economic impact in communities.

In 2021, Verizon announced that they will increase their spend across diverse-owned production companies.

Method • Spend over 30% with diverse-owned video production companies and

increase video productions using diverse directors from 24% to 30% • Spend over 30% with diverse-owned experiential production companies • Spend over 30% of the company’s print production spend with diverseowned print production companies

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IMPROVING MARKETING SUPPLIER DIVERSITY PROGRAMS

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