In today’s economic climate, outsourcing with the intention of decreasing costs has become increasingly important in order to attain or maintain a competitive advantage. According to a recent Harvard Business Review article, over 53% of marketing executives reported that they plan to outsource their marketing.
Outsourcing a company’s marketing is a strategic decision where the entire marketing function is no longer performed in-house with the purpose of re-focusing a company’s activities on its core competencies. For years companies have been outsourcing some of their marketing activities such as advertising, graphic design, website design and research. Outsourced marketing results in a shift from an internal to an external marketing department. The marketing firm handles everything from research, analysis, strategy, planning and management to advertising, public relations, direct marketing, internal communications, and web marketing
What are the benefits?
Cutting costs is just the beginning. The additional benefits of outsourcing lie in the value it creates.
- Aligned Objectives When using an advertising agency or a design firm, the focus is on creativity. As a result, efforts may be geared more toward winning awards than on maximizing your company’s ROI. It has long been established that an award-winning campaign does not necessarily equate to award-winning sales. An outsourced marketing firm creates the strategy, objectives and creative of each campaign and it is then responsible for measuring the success of the activity. Everything is centered on ROI, thereby closely aligning its objectives with yours.
- Increased Flexibility Outsourcing your marketing gives you additional flexibility in your activities. You can pursue numerous activities simultaneously without overtaxing your internal staff. An outsourced marketing firm has additional, trained and experienced staff on hand that is able to handle emergency, short-term or periodic projects. There is less gear up time, resulting in quicker response times and more efficient activities. Focus Scare Resources On You Core Business You are in business to do what you do best. Nothing else should detract from your core competencies. Outsourcing your marketing shifts the focus from marketing activities to those that are at the core of your value proposition; those that benefit your customers directly. Every business management expert will tell you to focus on what you do best and unload the rest because both money and time are extremely scarce and must be directed where they can result in the largest gains. One of the most difficult thing for a business owner to do is to admit that another person or company is company is better qualified to do something and to let go and allow them to do it. In this case, a business owner’s largest obstacle can be him or herself.
- Free Up Time of Valuable Personnel Each person has a finite amount of time and energy and it is essential to keep their time and energy focused in the most crucial areas of the business. It is a very common mistake for key personnel to be distracted from their core competencies in order to have a hand in a company’s marketing. When the marketing is outsourced, this is much less likely, particularly when concerns are minute, day-to-day details of little consequence to the bottom line. A company's highly paid staff, including owners and upper management can focus on doing what they are educated, trained and experienced to do, like running the company, developing sales, etc. More importantly, an outsourced marketing firm is educated, trained and experienced in marketing and is therefore better equipped to more efficiently and effectively handle the marketing.
- Play With The Big Boys Outsourcing can help small businesses afford the talent and activities that are out of their reach. Outsourcing allows even small companies to access large economies of scale, efficiency, and expertise that are common to large companies.
- Reduce Risk Every penny your business spends is a risk. Outsourcing allows you to share a portion of your risk with another company. You will be able to reduce your fixed assets, overhead, payroll, management fees and more. Additionally, because an outsourced marketing firm is an expert in the field of marketing, it is much better situated to minimize any risk relating to marketing than a firm with expertise in other areas.
- Get Access To Specialized Skills Every business needs consultants and experts in certain areas at certain times. Using an outsourced marketing firm provides you with immediate, affordable access to top-level professionals that are highly skilled in specialized areas, from consumer behavior to package designers. Additionally, these experts are better able to serve your company more loyally than are consultants who specialize in a given industry and may be working with some of your competitors.
- Proactive vs. Reactive Marketing An outsourced marketing firm is often in a better position to provide a proactive marketing strategy. An internal marketing department is more apt to be sidetracked by internal activities, changes, and fires that need to be put out.
The specific reasons to outsource are as varied as the companies themselves. But the basic incentive for outsourcing remains the same: since the life-blood of the company lies in doing what it does best, it is only reasonable to acknowledge and accept that it cannot and should not try to do everything. By focusing on its areas of expertise, the company can capitalize on its own talent pool. This, then, is the most important and most basic requirement.
The decision to outsource is often made in the interest of making better and more efficient use of time and resources, reducing costs, or redirecting /conserving energy to focus on core competencies. As to specific reasons to outsource, some companies are looking for a chance to turn things around while others are seeking to create business models that will give them an edge. Some see outsourcing as a viable alternative to overhauling outdated office operations, to provide lacking in-house resources, or to spend more time innovating and dealing with customers. Some are dealing with rapid expansion while others need to get a better handle on the budget through predictable costs.
So What’s The Bottom Line?
Outsourcing improves the bottom line! Overhead costs are reduced by eliminating wages for additional employees, benefits, extra office space, computers and software – all alternatively provided in-house.
Read the PHANTOM POWER Outsource Marketing White Paper
By Jennifer Pricci
