1. Introduction
In the world of business, change is a constant. One of the most significant shifts of recent years has been the adoption of outsourcing. In this strategic practice, companies delegate specific operations to third-party entities. This trend is driven by the advent of the Internet, remote work, and the globalization of professional services, which have broadened businesses’ reach beyond traditional boundaries. Marketing, a core function determining a company’s interaction with its customers and the world, is one of the most commonly outsourced operations. According to Statista, the global outsourcing market reached a staggering $92.5 billion in 2019, reflecting the widespread acceptance of this approach.
The increasing complexity of the business environment has necessitated this shift towards outsourcing. Given the rapid advancements in technology and the expanding array of marketing channels, companies need help maintaining in-house expertise in all aspects of marketing. Furthermore, hiring and retaining top marketing talent can be prohibitive for many businesses, tiny and medium enterprises (SMEs) operating on limited budgets.
However, outsourcing is about more than just cost-saving. It also allows businesses to tap into a wealth of knowledge and expertise gleaned from years of experience across diverse industries and markets. Outsourcing enables companies to access innovative marketing strategies, employ state-of-the-art technology, and benefit from the external perspective that a third-party agency brings, all of which can invigorate their marketing efforts.
2. Background of Marketing Outsourcing
Marketing outsourcing involves delegating a company’s marketing activities to a third-party agency or consultant. The scope of outsourcing can range from specific functions like digital marketing, content creation, SEO, or social media management to the entire marketing operations. The primary goal of marketing outsourcing is to leverage the agency’s expertise and innovative solutions that may be available in a variety of ways.
A notable case is the world-renowned toy company LEGO. In 2013, LEGO outsourced its digital marketing operations to Proximity, a specialist agency. The rationale behind this strategic move was to access a wider talent pool and harness resources that would have been exorbitantly expensive to maintain in-house. LEGO’s experience shows that outsourcing is not just about downsizing or cost-cutting; it is about enriching a company’s capabilities and potential for growth.
Outsourcing also frees up the company’s internal resources, allowing them to concentrate on their core competencies. By outsourcing marketing, the internal teams can focus on product development, operations, customer service, and other critical areas to the company’s success. This can lead to more efficient resource utilization and better overall performance.
3. The Benefits of Outsourcing Marketing
Outsourcing marketing offers numerous benefits. A Deloitte survey reveals that 59% of businesses outsource to reduce costs. But cost-saving is only one aspect. Outsourcing allows companies to tap into the expertise of seasoned marketing professionals, use advanced marketing tools, and adopt effective strategies that are proven to deliver results.
By outsourcing marketing, companies can ensure they have the best minds working for them without the expense of hiring full-time, in-house professionals. They can access a wide range of skills and expertise that would be challenging to maintain internally. Moreover, they can scale their marketing efforts up or down based on their needs, giving them much flexibility.
LEGO’s decision to outsource its digital marketing operations to Proximity led to remarkable results. Within a year, there was a 61% increase in organic search visibility, resulting in a higher online presence and improved brand recognition. These results demonstrate the transformative potential of outsourcing in boosting a brand’s marketing performance.
59% of businesses surveyed said they outsourced to cut costs, and 57% said they outsourced to focus on their core business.
Deloitte survey
4. When It’s Suitable to Outsource Marketing
The decision to outsource marketing is highly dependent on a company’s specific circumstances. Outsourcing is typically suitable for businesses that need more skills or resources in-house, have budget constraints, or need to scale up their marketing efforts rapidly.
Small businesses and startups often need more resources to hire a full-time, in-house marketing team. By outsourcing, they can access a team of marketing professionals at a fraction of the cost. Outsourcing is a cost-effective way for such companies to develop and implement a strategic marketing plan.
Companies with fluctuating or seasonal demand may also find outsourcing advantageous. For example, a retailer may ramp up marketing efforts during the holiday season and scale back during slower periods. By outsourcing, they can easily adjust the level of marketing support based on their needs.
Outsourcing is also suitable for companies that need specialized marketing skills. Digital marketing requires extensive expertise, including SEO, content marketing, social media management, and more. By outsourcing, companies can access these skills without the cost and effort of hiring and training an in-house team.
5. When Outsourcing May Not Be Ideal
While outsourcing offers many benefits, it’s not a one-size-fits-all solution. For some businesses, maintaining an in-house marketing team may be more beneficial. Companies with unique business models or those operating in niche markets may need an in-house team that deeply understands their business and can respond quickly to changing dynamics.
Companies that need tight control over all aspects of their business may also prefer an in-house team. While outsourcing agencies can become strategic partners, they are still external entities. There can be communication gaps, differing work cultures, or divergent visions that can complicate the relationship.
Outsourcing also involves handing over a degree of control to the agency. If the agency fails to deliver, it could harm the company’s brand image or customer relationships. Therefore, outsourcing requires careful consideration and thorough vetting of potential service providers.
6. How to Keep Outsourcing Effective
Ensuring the effectiveness of outsourcing involves active management of the relationship with the outsourcing agency. Clear communication is crucial. Both parties should clearly understand the company’s marketing goals, brand values, target audience, and key performance indicators (KPIs).
Regular reviews and feedback are essential for keeping the outsourcing relationship on track. Companies should regularly assess the agency’s performance against the agreed KPIs and provide constructive feedback to foster continuous improvement.
Building a successful outsourcing relationship also requires trust and respect. Companies must view their outsourcing agency as a strategic partner, not just a service provider. They should involve the agency in strategic discussions, value their expertise, and consider their input in decision-making.
Airbnb’s relationship with its creative agency TBWA\Chiat\Day is an excellent example of a successful outsourcing partnership. Since 2014, they have worked together to create impactful marketing campaigns that have helped Airbnb gain significant market share in the highly competitive hospitality industry. This successful collaboration shows the power of a well-managed outsourcing relationship.
The global business process outsourcing (BPO) market size, including marketing functions, was valued at $221.5 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 8% from 2020 to 2027.
Grand View Research
7. Concluding Thoughts
In conclusion, marketing outsourcing offers several benefits that can help businesses boost their performance:
- It provides access to a wide array of marketing expertise and advanced tools.
- It offers cost savings and greater flexibility in scaling marketing efforts.
- It allows companies to focus on their core competencies.
- It enables businesses to stay updated with the latest marketing trends.
However, outsourcing may only be suitable for some businesses. Companies with unique business models, those requiring tight marketing control, or those operating in niche markets may be better off with an in-house team.
To make outsourcing work, businesses must manage the relationship actively, ensure clear communication, and build trust with the agency.
As pioneers in the Chief Marketing Officer as a Service (CMOaaS) and fractional CMO consultancy, we at Adsvisory understand the nuances and potential of outsourcing marketing. We believe that:
- Businesses should consider outsourcing if they need more in-house expertise, need to scale quickly or have budget constraints.
- The decision to outsource should be strategic, considering the business’s specific circumstances.
- To keep outsourcing effective, companies must manage the relationship actively, set clear expectations, and regularly monitor performance.
- Businesses should choose a reputable agency that aligns with their values, understands their business, and has a proven track record.
In the age of digital transformation, businesses need to be agile, adaptive, and innovative. When done right, marketing outsourcing can be a strategic tool to help companies to stay competitive and drive accelerated growth.
