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Should You In-House or Outsource Your Marketing?

Posted by David Lee on Oct 10, 2017 8:39:03 PM

Whether you should outsource your marketing is one of those questions that just about every company eventually has to ask, especially when senior management sets sales and growth targets. Although there is no trusty magic 8-ball to find a quick answer, there is a framework to guide and simplify the outsourcing decision-making process.

The Gartner Magic Quadrant

One of the most popular tools used to help organize and guide the decision-making process is the Gartner Magic Quadrant

This framework provides a method to help you understand how to approach the outsourcing question.

The two most important factors to consider are:

1. The strategic importance of the task: Does this activity give your company a competitive advantage?

2. The organizational expertise: Does your staff have the expertise to excel at these tasks?

Outsourcing Marketing Decsion Matrix

 The matrix is divided into four quadrants:

Find a Strategic Partner—Some activities are critical to the success of a company, but do not represent the core competency of the company. Finding a trusted strategic partner to outsource these tasks is the best solution.

For example, a powerful setup for forming a strategic partnership with a marketing agency would have a shared responsibility model:

  • The company and strategic partner are both responsible for determining the marketing strategy, goals and metrics to measure the results.
  • The company manages the results.
  • The partner is responsible for determining the best tactics and executing the tasks to accomplish the goals that are agreed upon.

Keep in-house—These are the activities that form the core activities for the company and should not be outsourced, especially if you have a proprietary manufacturing process, are developing an application or have a requirement with very tight quality control standards.

For example, if you manufacture products, you will want to keep the assembly process in-house to maintain control over quality, cost and process. If you are a business service firm, like an accounting company, you will want to keep your CPAs and staff accountants in-house.

Outsource—These activities are low in strategic value and they are not part of the core skill sets necessary for your company to produce the product or offer the service to your customers.

These activities are commonly classified into “cost center” departments, like accounting, bookkeeping, payroll, IT-managed services, human resources or office cleaning.

Keep In-House or Outsource—These activities need to be evaluated on a case-by-case basis. Because you have some staff with the required skillset, you could keep these activities in-house.

But should you? What is the opportunity cost of having the employee do that task as opposed to other activities that would be more useful elsewhere and are more in alignment with what your company actually does?

A couple of examples for content creation and blogging:

  1. If you are a law firm, and your bill rate is $400: It takes about 3.5 hours to write a blog. This means that as an attorney, a blog has an internal cost of $1,400. On the other hand, if you outsource the creation of the blog article, it will take about 4.0 hours of agency time and about 30 minutes of your time. So your cost of outsourcing that blog article is $700 (assuming an outsourced bill rate of $125/hour x 4 hours + 30 minutes of your time).
  2. If you are a marketing director at a manufacturing company and you are an excellent writer: You also could spend 3.5 hours writing a blog or spend 30 minutes talking with an agency and give them the content so they can create it for you. You now have gained 3 hours back in your day. What could you do with that extra 3 hours?

Why you should partner with a marketing agency

There are three reasons why most companies outsource their marketing activities.

1. Marketing is a competitive advantage.

It may seem counter-intuitive that marketing is high in strategic value. But the simple fact is that marketing allows companies to communicate and educate their audience on the value of the product and services. And as a result, they will generate more sales than their competition.

 2. Organizational expertise

Unless you are a marketing or advertising agency, then it is unlikely that you have to or want to invest in the effort to have access to top-tier marketing talent.

Top-tier agencies obsess over finding and retaining the best and brightest marketing talent available. They spend a lot of time giving their consultants the tools, processes and technologies to enable them to do their job. Marketing companies invest in their training and education to keep their team at the top of their game.

Indeed, one of the main reasons companies decide to outsource their marketing is that they believe agencies delivery superior quality or performance over in-house staff. 

 3. Marketing is difficult!

Creating high-quality content that engages the target audience is a common challenge for CMOs and marketing directors. They understand that marketing is more than posting a blog once per week, posting to social media two times a week and tweeting three times a day.

Effective marketing involves asking (and answering) difficult questions, such as:

  • What are your marketing goals?
  • Who is your audience?
  • What content and message do you need to produce to be seen as a leading authority?
  • How do you connect to your audience—what channels do you use to bring people to your website?
  • How do you build an integrated nurturing campaign to turn visitors into leads?
  • How do your marketing and sales department work together to turn the lead into a customer?
  • How do you build a passionate and loyal audience?
  • How do you prove that your marketing is making a difference in sales?

Conclusion

Sounds hard? You bet!

In order to make this all work and to beat out your competition, you need to have a talented team of creative individuals. The advantage of partnering with a marketing agency is that you are not hiring a person and you are not hiring for a point solution.

Instead, when you partner with an agency, you get access to a deep and varied skill set, including:

  • Writers who create compelling and informative stories
  • Promoters who know how and which channels to promote
  • Web developers who architect your website site correctly and efficiently
  • Photographers who have the equipment and the eye for setting up the shot to put you and your products in the best light
  • Marketing and business consultants who know how to formulate the best marketing strategies and tactics to meet the business goals of their clients

The value of marketing is moving from being a cost center to a strategy that is needed in order to compete in today’s digital world.  For example, more than 50% of marketing leaders rely heavily on agencies, and only 19% have a strong in-house marketing team. This thought is also supported in the 2017 CMO survey, where companies are looking to increase their use of outside marketing agencies by 5.1%. 


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Topics: Marketing Strategy