Recently, I met a senior marketing executive from one of the world's largest brands. She was discussing the possibility of offshoring her company's marketing operations.
As we got into the discussion, it became clear that there were three key drivers for the company's decision to possibly outsource its marketing operations.
First, the brand had been asked to reduce spend by at least 20%. To put that in context, various industry reports state that 2009 marketing budgets were, on average, cut by more than 20% compared with pre-recessionary levels. And the number of companies that cut marketing budgets was 25% higher than predicted in January 2009.
Second, as brands go global, maintaining brand consistency across geographies is becoming a huge issue for marketers. Consistency is important not just from a customer-experience standpoint but also from the perspective of marketing efficiency. If you create standardized brand "templates," the local geographies can respond faster to marketing and sales needs.
Third, the marketing function is under pressure to deliver more return on investment and much faster than before. Management is asking tougher questions of its marketing teams, and the focus on metrics has never been sharper.
The company had made the usual cost reductions, such as the elimination of travel, training, new hires, and new campaigns, but it was looking to further reduce costs and increase efficiency. That triggered the possibility of outsourcing marketing operations.
If companies are interested in outsourcing their marketing operations, what can they do to ensure that their plan is well thought out and effective?
My counsel to this particular marketing executive was to keep seven mantras in mind.
1. Secure a champion
Ensure that the company has an outsourcing sponsor or champion who can evangelize the need for outsourcing delivery, address any issues that arise, and resolve problems.
2. Charge the CMO with driving adoption
Make sure that the chief marketing officer (CMO) is fully supportive of the outsourcing plan. The CMO's approval should be communicated to all brand managers to combat their resistance.
One trick that works is to have the CMO ask each CEO during their monthly, quarterly, and annual marketing reviews how they have leveraged the outsourcing unit to deliver marketing efficiencies. Doing so will ensure that all brand managers see outsourcing as a CMO priority.
3. Be clear about what can and cannot be outsourced
Draw up a list of functions that can be delivered from an outsourcing center. For example, outsourcing event management can be costly and ineffective because it requires much client intimacy in terms of planning and last-minute exigencies, such as booth setup and brochure placement.
Although designing the booth can be outsourced, the logistics need to be managed on-site. Therefore, make a list of what can and cannot be outsourced.
4. Start with the low-hanging fruit to build credibility
The list of activities to be outsourced must have the highest probability of delivering on efficiency, time, and cost metrics. To be credible, the outsourcing unit must first deliver low-hanging fruit and then gradually scale up to more complex tasks.
For example, start with parts of email marketing, such as database creation and validation, design layout of marketing collateral, making brand-consistent PowerPoint presentations, and website/portal development and maintenance. Once those reach a certain level of stability, look at more complex aspects of marketing, such as campaign design or content creation.
5. Keep all delivery options open
Outsourcing centers can be set up in several forms. They include a fully owned captive center, a third-party service provider, or a hybrid model where some parts of the operations are outsourced to a third-party service provider and some are retained within the captive center.
6. Set up a robust governance structure
This is probably one of the most important but least understood outsourcing issues. A documented governance framework that details every process and workflow will help the delivery teams by making the task "process-oriented." It will also put in place strong review mechanisms through steering committees to address any issues that the center or its client users may face.
7. Publicize the outsourcing center's successes
The company must ensure that the outsourcing center's successes and any client accolades received are publicized among top management and the wider marketing team. Perception matters.
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Marketers have outsourced creative, right-brain activities since the 17th century. That was the genesis of the advertising industry.
Since then, companies have evolved to the point where marketers outsource a majority of their functions—be it direct marketing, advertising, events, media planning, and even analytics, which hitherto was closely held within the "ivory tower."
Some have outsourced more than others. But today, an even broader adoption of outsourcing is under way—that of entire marketing operations. Marketers need to embrace the change and make the most of it to drive greater value for their business.