The Pros and Cons of Outsourcing Marketing

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Marketing
Marketing

In general, marketers are good at managing their marketing systems in house on a day-to-day basis. But the skill sets used to create day-to-day reports and analyses are different than those needed to assess the information in a database to make decisions about how to track customer behavior, what data is needed, and how to attack the marketplace.

While company marketing departments have plenty of talented creative types, they may lack the left-brain analytics experts needed to better understand their customers in today's information-rich, multichannel environment. Additionally, critical IT resources are often tasked with a company's financial and operational systems, thus leaving marketing out in the cold. For this reason, the outsourcing of marketing activities like reporting and analysis is catching on.

Many marketing and advertising functions can and have been outsourced with varying degrees of success. From the most strategic elements like marketing strategy and program planning, to the more operational and tactical elements like customer database and customer analytics, all aspects can be outsourced.

Overall, however, while many companies will seek insight from consulting partners on the strategic elements of marketing, few outsource the tactical elements. CMOs are comfortable getting strategic advice and even using strategy consultants on their teams when developing a marketing strategy, but in the end, strategic elements such as marketing mix, spend allocations, and marketing communication strategies are just too critical to the operation to outsource them. A CMO's best chance of leveraging outsourced resources is on the tactical side.

By far, one of the most outsourced functions is the creation and ongoing maintenance of analytical and marketing execution capabilities, including such activities as outsourcing customer database hosting/management, customer reporting, customer analytics, including advance modeling and statistical services, and overall support for the marketing lifecycle. With the focus of IT staff on business operations versus marketing, CMOs often can benefit from outsourcing these types of operational needs to a vendor. Marketers can then focus on customer segmentation, customer management, and program/campaign execution and measurement, while the outsourcer takes care of all the technology and related support services necessary to compete in today's demanding marketing environment. In fact, the increasing interest in outsourcing the tactical elements of marketing has spurred the growth of software as a service (SaaS) providers in the marketing space.

The biggest issue, however, with CMOs outsourcing any part of their business is a perceived sense of lack of control. In the past things like data security and other factors might have discouraged companies from outsourcing part of their marketing processes. Today off-the-shelf, inexpensive technologies can not only solve these problems, but for many companies, the security and checks and balances of SaaS and marketing service providers are often much better than companies' own processes and policies.

Prevalent is the thinking that if a person in another office or firm is doing the work, they won't be as responsive, or will attempt to point a finger at another firm for problems. The comfort of having a person in the same company, though, is often overrated. Several CMOs and marketing executives have been very public about their increased sense of control when using outsourcers, saying things like, "If I call our marketing partner even after hours, the CEO or account manager will get back to me within hours, something that would not be possible with a fully in-sourced solution."

Overall, if an outsourced provider is selected and managed carefully, and if the relationship is maintained at the proper levels using service level agreements, or some other type of assurance that the solution will be up some percentage of the time, many of these issues can be avoided, and moreover, a productive symbiotic relationship can exist between the outsourcer and client.

About the author: Michael Caccavale is CEO of Pluris. Contact Caccavale at mcaccavale@plurisinc.com.

EXPERT OPINION
EXPERT OPINION