Outsourced Marketing?

One of my Linked-in contacts publicly asked this question which I found worth discussing:

Can marketing as a function be outsourced? Can the whole function be outsourced or just some part of it? Will it be next in line for outsourcing after IT, HR & legal?

In my opinion, marketing is a function that is so central to a business that it requires careful nurturing and personal attention to the point of parenthood. Only “your own hands” can do the best job when dealing with your clients customers and selling your products. The best marketers / sellers might often be the ones who can identify with the vision of the product / company and sell with passion! Outsourcing online marketing / online activity / portals is perhaps as much of the function that could be outsourced. Advertising, is, of course, outsourced too. I have also come across a number of Event Management firms that are willing to host events, participate in fairs in behalf of the company as “service providers” to a company’s marketing function.

IT and Legal functions, on the other hand, are more “mechanized” functions that can be performed by a component external to the organization in question. For instance, in case of IT / Outsourced Software Development, if the Design of the IT Architecture is broadly arrived at, then the “implementation” details are of little consequence and will usually not vary much – whether developed in-house or outsourced.

Gail J. McGovern, a profesessor at Harvard Business School has an interesting insight to offer:

The benefits to business include cost savings and improved quality. Additionally, many firms lack “left-brain” analytical skills in-house, even though those skills are becoming more important than ever in an age of one-to-one marketing, and find that outside expertise is often needed. Sony, a legendary marketer, outsourced its program to market products through its online “Sony Style” store, recognizing that they needed expertise in areas such as customer database construction.

Although Marketing can be “Outsourced” I do not think it can ever be “Off-shore Outsourced”.. Simply because Marketing requires a deep understanding of local markets that “offshorers” cannot develop sitting miles away!

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37 thoughts on “Outsourced Marketing?

  1. Nice….
    so that we can get more views on it..
    I am the contact in LinkedIn who Amit is talking about πŸ™‚
    http://www.linkedin.com/answers/marketing-sales/business-development/MAR_BDV/162489-15686712?browseIdx=0&sik=1201452363700&goback=%2Eamq
    I would like to hear comments on the topic πŸ™‚

    Other points to be considered:
    An article appeared in this regard, HBS Mar 2005
    http://hbswk.hbs.edu/item/4883.html

    Many companies also started on this business model and started making claim marketing can be outsourced: http://www.outsourcemarketing.com/

  2. You last sentences touches upon what I thought when I saw the topic of this article. But what if the company is trying to expand to new markets? What if it wants people with ‘local’ understanding (and local here referring to markets outside of its home turf)? Is it similar to outsourcing advertising? Or is it like a layer of interpretor trying to add local sensibility to what global firms are trying to achieve worldwide?

    In summary, marketing can be outsourced if you are trying to tap markets in that country simply because because its not just about ‘your own hand’ but also ‘their language’ which does the trick. If you want to know more, go read about how and why Americans do business with the Japanese in Japan and how the Japanese have come back to dominate the car market in North America and put Michigan on top of the unemployment list.

  3. @ Ujjwal,

    Thanks for pointing out the type… (I found out the one in yours… but i’ll let it be! πŸ˜‰ … too much hard-work…)
    I meant “customers” – thats a more appropriate term to use here.. instead of clients!

  4. Your post doesn’t cover MNCs, who have operations in other countries too. In that case, the local marketing is best done by people who understand the local market.

  5. @ Ruhi

    That’s precisely what I said in the last line of the post. That is the reason why Marketing could possibly never be “offshored” … even if it can be “outsourced”..! Besides this wasnt a SWOT analysis on the subject.. just a random outpouring of thoughts.. πŸ˜‰

    @ Kpower..

    For the sake of better-looking products in India, I HOPE they outsource their designers!
    :mgreen:

  6. well .. outsourcing is usually done in an area where the respective company does not hold expertise. If the company feels that its marketing is weak, i do not consider it as a problem to outsource the marketing division but then it has to be taken into account that the costs incurred through outsourcing is less than the cost of keeping a marketing division of its own. Goldman Sachs can be considered as a typical example. The company has its own IT division which maintains its IT infrastructure and this is costing GS less than what it could have cost them through outsourcing.

    What i would suggest over here is that, if outsourcing of marketing is done, we should divide the marketing sections under different modules. These modules should further be connected through different functions. Now the company can outsource these modules keeping the functions or connectors between modules in their hands. For example like advertising, the company usually lets the ad agency know about the product and the theme and other necessary details and outsources the work. Similarly, if the company is entering into a new market, a local market outside its home turf like what ujjwal has metioned above, it can utilise or outsource its marketing section for the time being coz the company does not know about the market behaviour in which it is entering. Like hyundai did many years back b4 it launched santro in india, it did a thorough market reserach on whether they should launch a smalll car or a higher segment car… either u do the research or get an experienced person who has already done it.. Atleast you save some time in the latter case!!

  7. I think that one can not outsource strategic decision making (CEO + board) and customer relationships.

    Everything in between can be outsourced to a party that is clearly aware of companys goals and strategies. This 3rd party would act as an “operational partner”.

  8. @ Teemu

    Exactly! Completely agree with you.. Marketing strategy cannot be outsourced (or rather, should not) be outsourced because it is such a central function.

  9. Well i agree with dushyant in the manner in which he has elaborated.We can always look towards the Outsourcing model but then it would depend on the companies whether they would use the approach according to the product, their finance and other significant factors.

    Though as we are already observing that social aspects are important in Marketing. Companies looking at outside market can definately benifit with the outsourcing model.

  10. @ Ruhi,
    HR??.. I’ve never heard of Call Centres doing HR work.. Call Centres engage in either of the following activities:

    1. Outbound Sales (This is exactly what Dinsan is referring to)
    2. Inbound Service Calls (Customer-Support)

    I don’t think HR has anything to do with either of them..

    And.. @ Dinsan,
    Yes… I guess if you include Sales / Pre-Sales in the spectrum of “Marketing activities” .. then I guess Outsourcing marketing is, in a few ways, already in progress!

  11. Amit, that’s called “HR”- Human Resources. It’s definitely not Finance/Management/R&D/Marketing. So, obviously these call centers are “human resources” of an organization.

  12. Marketing has several components. What component are you talking about here? Setting up retail stores is totally different. Launching a product is different. Online marketing and advertising is different. Obviously, you can’t outsource the whole thing. And why would you? You can, like dushyant said, hire a company to do the research. But the whole activity is dynamic. And needs personal attention. By outsourcing it, you only interrupt it.

    Event management is not marketing. And it’s on behalf not “in behalf”…

  13. @ Pure..

    I was not referring to any particular product. Like I’ve mentioned in the post.. This was a general question posted on Linked In which we thought was worth a discussion. Agree with you.. Marketing as a function cannot (and should not) be outsourced. But certian aspects of it can (and are being) outsourced already.

    As Dinsan rightly pointed out – Call Centres for instance. And Advertising is in any case an outsourced activity.. at least the creative bit.

    And thanks for pointing out the grammatical error (Typographical error!) πŸ˜€

    As for the theme, hmmmm… I’m sort of experimenting with this rather formal look.. Liking it as of now..! πŸ˜›

    @ Dushyant: :mrgreen:

  14. The strategy and vision cannot be outsourced. But every other process, if it can be digitized, can be considered for outsourcing and hence offshoring. Almost every marketing process has repetitive elements which can easily be outsourced. And with the growing cultural homogenity it’s pretty easy to offshore. Just as yuppie marketers have, through processes and research, succeeded in selling products they don’t personally use to people they have nothing in common with, the cultural nuances can be incorporated.

  15. Marketing can be completely outsourced as a departmental function *if the communication between the outsourced marketing department and the company is excellent.* This is a proven thing.

    An outsourced marketing department is ideal for small and medium businesses because they can have all the resources and expertise their larger competitors have in-house without the expense of a complete marketing team.

    As a company gets larger and it’s offerings more complex the connection becomes more difficult but we find that just about any company with less than 50 or fewer employees can reap tremendous benefits from an outsourced marketing department.

  16. I totally agree with Amit in the fact that marketing is not like any other function of your business and is like the baby that requires careful nurturing. What everyone here is talking about is exactly the same point , Marketing as a function cannot be outsourced . A single part or activity can definitely be outsourced but eventually the entire direction , vision is the function of the company. You can get market research outsourced for sure , but you decide what information you want , only the mechanical bit is out sourced. The advertising agency will definitely design an ad and run a campaign for your product but it is you who decides what you want your product to be seen as , positioned as , projected at. Same goes for all the other steps involved , the puppets maybe outsiders but the hand controlling the strings should be in yours’ , that is if you want the objective to be achieved , which again only you know best.

  17. @ Chris Denny: Very valid point – completely buy your observation. Thanks for sharing!

    @ Paridhi: πŸ™‚ .. Glad you concur. The marketer knows his objectives best.

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