How To Stay Ahead Of The Changes In Marketing Development Fund Management

Clay Tuten is VP of Marketing for KeyMark, a U.S.-based process automation software company.

A shift is occurring with how vendors are managing their marketing development funds. If you have not experienced this yet, you are likely to in the very near future.

Traditionally, funds have been distributed to partners for a variety of uses, but these dollars are under increasing scrutiny. Vendors want to know they are getting a return on investment from funding provided to a partner. Who can blame them?

Events, for example, have been a big area for MDF spend and are always a huge challenge for tracking returns. Having a logo plastered on event signage does not provide ample value for the investment, especially when there are often other vendors represented by that same partner.

Companies are rapidly pulling these MDF programs for one primary reason: control. CFOs are paying attention to where every dollar goes, and if spend can’t be justified by tracing it to a tangible return, then those funds get cut or reallocated. Vendor marketing leaders know the value of supporting partners by generating leads for sales, so they are trying to get creative on how to leverage those dollars in ways that produce trackable results for their partners.

The pitfalls with this new approach are often not anticipated. Shifting all control to the vendor robs the partner of leverage, leaving them with the angst previously felt by the vendor. Vendors are creating programs on behalf of the partner to better track and manage their investment, which can inadvertently remove any input from the intended beneficiary. This leads to ineffective programs and frustrated partners.

The solution is communication. Vendors need to engage in strategic and authentic dialogue with their partners. If vendors continue with traditional MDF programs, it’s only right they should be able to have a say in how the funds are spent and even require partner transparency on results. Requiring spend metrics is completely reasonable. If the vendor pulls MDF programs, they should invest ample time and effort in working with their partners to create plans that are tailored to their needs. One-size-fits-all programs will not work here!

Vendors need to be aware of their partner’s marketing and sales operations. A partner with an adept marketing plan that includes a successful search engine marketing strategy may not need funding or assistance in that area. A top 10 partner does not need the same level of assistance as a smaller or less productive partner. If marketing and sales looked the same in every business and every vertical, then a templated solution might make sense, but that is not the reality.

When a vendor loses touch with a partner’s needs, it’s only a matter of time before frustrations start to grow and relationships sour. It may require a significant time investment to meet individually with each partner, but it’s worth the investment to hear from “the boots on the ground.” Automation can assist in this effort. Providing automated surveys on a regular cadence is one way to reduce the need for frequent in-person meetings. Survey feedback can then provide talking points for future calls and engagements.

In the example of funding for events, marketing leadership may need to get creative with their budgets to offset the loss of MDF dollars. For example, if a vendor is willing to assist with a pay-per-click campaign or even manage one on the partner’s behalf, money that might have been spent on SEM can be reallocated toward an event. This may force partners to abandon sponsorships for events, leading solely with their brand and placing less emphasis on vendor logos. This can produce positive results with a shift to promoting yourself as the differentiator.

Some marketing leaders may be frustrated by this growing trend of MDF control. This is the time to pause and consider the cause for the change. Attempt to understand the perspective of the other side, and take a collaborative approach to find a solution that benefits both the partner and the vendor. Embrace the change to generate growth.

Forbes Communications Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?