When To Outsource Your Marketing 1
Introduction Questions around business-process-outsourcing is an ever present issue for owners and senior executives. The rapidly changing pace of market conditions and consumer behavior has mandated that company leadership stay at the forefront of technology and marketing movements. The advantages of keeping functions in-house versus hiring outside expertise must be carefully weighed to ensure profit maximization and brand differentiation. When it comes to evaluating the merits of outsourcing your marketing, there are no hard and fast rules. Each situation is unique and must be evaluated within the larger context of your industry, your business model, and your company s market position. In this e-book we ll look at key factors that should motivate company leadership to consider outsourcing marketing strategies and tactics. 2
Defining Marketing Outsourcing Before jumping into the details of when to outsource marketing and when to keep it in-house, let s take some time to define what we mean by outsourced marketing. Defined, outsourced marketing is when an organization contracts with external company resources to implement marketing strategies and tactics. This could be for functions like marketing research, development of marketing strategies, and execution of marketing tactics. The most basic logic behind marketing outsourcing is that it provides expertise in each marketing discipline (pay-per-click, SEO, SEM, content writing, website development, landing page creation, branding, advertising and video production) at lower costs than developing internal resources. Additionally, it allows flexibility and scalability for projects and campaigns of any size and scope. It s this pay-for-service model that compels companies of all sizes to opt for outsourcing, because it allows for the utilization of services for long or short periods of time. 3
Why Outsource Marketing Outsourcing the marketing function to external resources can deliver significant benefits to the organization. Some of the most readily apparent efficiency gains from outsourcing are as follows: 1 Focus on company core competencies 2 Exponentially increases the talent pool 3 Reduce fixed costs 4 Access to unique perspectives 5 Budgets for in-house staff are declining 4
1 Focus on Core Competencies Outsourcing the marketing function can be smart for organizations that want to narrowly focus on their core competencies. While outsourcing is not always necessary for these organizations, it allows them to invest company personnel time on only those functions that are at the heart of the organization s deliverables. 5
2 Exponentially Increases the Talent Pool By outsourcing marketing functions, you exponentially increase your talent pool. As more complex projects emerge, in-house teams may not have the skills required to implement the project. This is where outsourcing to a larger more experienced marketing agency can bring efficiency gains. These external resources will have the skills, tools, and expertise needed to coordinate and execute large marketing campaigns across multiple channels. 6
3 Reduce Fixed Costs One significant benefit to outsourcing business functions is that you move a significant chunk of your expenses from fixed costs to variable costs. This is important for organizations that are testing new markets or rolling out new products. The ability to execute on essential marketing functions like content creation, website development, and search engine marketing without the need to lock in fixed salary and benefit costs are a real driver for marketing outsourcing. 7
4 Access to Unique Perspectives A less tangible but very important benefit of marketing outsourcing is the ability to tap into unique perspectives and objective points of view. Oftentimes in-house designers, content creators, and analysts can become myopic or narrow-minded when looking to solve company business problems. By bringing in external company resources to help with creative, branding, and content, you tap into the ingenuity and inventive ideas of outside resources. This helps business leaders avoid limitations like groupthink and tunnel vision when problem-solving. 8
5 Budgets for In-House Staff are Declining As budgets shrink, organizations are being forced to produce higher results with declining resources. This has resulted in fewer finances available for securing and maintaining highly technical and highly skilled staffers. This is where outsourcing key technical functions like website development, branding, and video production make sense. By engaging with agencies for these functions, organizations can stay financially nimble while also maintaining a high quality look and feel for their brand. 9
Getting Started with Marketing Outsourcing YOUR STARTING POINTS Business Model Evaluation Drivers for Marketing Outsourcing 10
Business Model Evaluation When evaluating the decision to outsource marketing versus build an in-house team, a business model review is a worth-while exercise. Some questions to initially ask about your organization are: Is your organization selling products or services? Are you operating in a well established market segment? Is demand for your goods and services consistent? What are gross margins on sales? What is the projected growth for your company? How important is timing in scaling your marketing functions? What is the competitive landscape like? As you start to answer these questions about your own business, clarity will begin to surface on whether outsourcing is right for your company. As an example, organizations operating in growth segments, with tighter gross margins, and with a high degree of variation in demand can benefit from outsourcing parts or all of their marketing functions. While this list of criteria is definitely not exhaustive, it can serve as a starter guide to whether outsourcing is right for your company. Now let s take a deeper look at some of the business reasons that would motivate organizational leadership to start looking for outside expertise. 11
Drivers for Marketing Outsourcing Cost Management A key reason organizational management would look to start outsourcing marketing functions is cost management concerns. When hiring in-house staff to promote, price, and package your goods and services, you are adding significant fixed costs to your company overhead. Salaries, benefits, and personnel expenses rise significantly when hiring technically skilled employees. These costs, while not permanent, are much more difficult to scale down when demand for your products starts to wane. By hiring a marketing agency or freelance talent to manage things like creative work, database management, and pay-per-click advertising, you shift these potential fixed-costs to variable costs. This change allows company management significantly more flexibility and scalability as they look to grow their organizations commensurate with demand in uncertain market segments. So, look to outsource marketing functions if you need or want the ability to scale up and down quickly and easily. 12
Need for Quick Growth Another key driver prompting company leadership to outsource marketing is time-to-market. When it comes to strategizing and executing on tactics for launching a new brand, repackaging a product, or developing a content strategy for your organization, timeliness is a chief concern. For an in-house team to be assembled to support these functions would take significant time, effort, and energy. Both human resources and company management would be needed to identify, recruit, hire, and educate new team members to support these initiatives. Instead of going the in-house route of having to hire internal team members to execute on these key functions, business owners should look to hire agencies or freelancers. These agencies will have built in teams with deep domain knowledge on things like SEO, pay-per-click, website development, landing page creation, content marketing, creative, and lead generation. This pre-assembled agency team allows company executives the ability to execute on essential marketing functions significantly faster than if they had to build an in-house team. 13
Technology Expertise The marketing landscape has shifted significantly, principally into the digital realm. Now, the primary ways of building brand awareness, thought leadership, and leads for your organization are through search engine marketing, web-video production, social media, email nurturing, blogging, and premium content creation. Additionally, the skill sets needed to execute on these tactics have become increasingly technical and precise. Hiring internal staff that have these technical skills can be difficult and highly expensive. In addition to luring employees with this expertise to your organization, helping them maintain their technical skills costs money and resources. The marketing automation platforms, analytics software, and design and development applications necessary to run an effective marketing organization continually change and evolve. Internal hires will need support from executive management to attend conferences, trade shows and industry events to maintain their skills. By hiring external resources like marketing agencies and freelancers, you ensure that you have the highest quality technical talent at all times. Competent agencies ensure that staffers and team members are always up to date and certified on relevant software like marketing automation platforms, design applications, and analytics software. By engaging agencies to run your marketing functions, you ensure top-level technical talent without the expense associated with hiring and maintaining in-house resources. 14
Growth Through Acquisition As organizational growth through company acquisitions becomes more commonplace, the appeal to use outside marketing resources becomes increasingly significant. Specifically, when companies merge, the resulting brands must merge or somehow co-exist under the same corporate umbrella. Additionally, marketing databases need to meld, and other internal systems must converge to assure brand consistency and corporate unity throughout the marketplace. Placing these demands on internal team members who maintain other internal responsibilities can be crippling and lead to bad outcomes. In these circumstances it makes sense to engage with outside professional resources that have experience in seamlessly merging brands together. Agencies can offer support on both the strategic and tactical level when it comes to merging organizations and unifying brands. 15
Need to Focus on High Value Functions For organizations engaged in inbound marketing where there are a plethora of inbound leads coming in from content marketing efforts, outsourcing low value follow-up functions can be a wise business decision. For example, when leads are generated from website form submissions, video views, and content downloads, smart marketing organizations are quickly following up on these leads. This responsiveness shows prospects that organizations are engaged and eager to earn their business. However, these functions of lead validation and qualification and appointment booking can quickly swamp internal resources that should be focused on higher value activities. When companies find themselves in this enviable situation, outsourcing these lower value lead follow-up functions can make sense. These functions can be quickly and economically outsourced to agency or freelance talent without significant time investments. Outsourcing these low value follow-up functions will ensure that your internal marketing and sales departments are focused on only high value activities. This is essential for company leadership who need to prioritize employee time on functions that can t be easily carved up and outsourced to outside talent. 16
Competitive Analysis Finally, the competitive landscape is constantly shifting and evolving. New competitors are always entering the market and your company s position within the market is continually oscillating. This environment necessitates quick movements and constant alterations to assure alignment with demand. By opting for outsourced marketing help, you can assure you have the resources to quickly respond to these competitive market changes in real time. This support helps assist management in achieving market leadership position, or warding off new competitive entrants. 17
Conclusion In conclusion, the decision to outsource marketing functions is a serious one. The merits of the decision should be weighed within the larger context of overall company strategy, internal bandwidth, and personnel resources. However, if implemented correctly, outsourced marketing can deliver significant efficiency gains for organizations large and small. It can keep fixed costs low, increase the speed at which marketing results are delivered, keep internal marketing resources focused on high value activities, and help position the company against competitors. Additionally, technology advances and internet connectivity have accelerated and simplified the process of outsourced marketing. As more functions are digitized (such as pay-per-click, creative, website design, and landing page creation), the ability for organizations to efficiently outsource specific tactics while maintaining the quality of the work has become easier. So - evaluate the state of your organization and your marketing resources and see if outsourcing a part or all of your marketing strategies and tactics makes sense. You ll be glad you did. 18
About Us Denamico is a Minneapolis-based marketing team of branding, strategy and interactive professionals. We help small to midsize businesses maximize their growth through cost-effective marketing to ensure the best ROI on marketing dollars invested. Our clients hire us either as their entire marketing department or as supplemental support for their existing marketing solution. Have questions about outsourced marketing? Do you have questions about outsourced marketing, or would you like to explore whether an outsourced solution is right for your business? Contact us for a free consultation at info@denamico.com or give us a call at 612.859.6317. 19