Question

Topic: Strategy

Outsourcing Marketing

Posted by Anonymous on 7/31/2006 at 8:32 AM ET 125 Points
Having an in-house marketing department has both pro's and con's. For sure, having a bunch of people can be a benefit. But what happens when you need skills that they don't have or don't have the time for? You end up outsourcing it yet still ending up with the head count cost.

So, surely more and more technology CEO/CFO's should be looking to outsource the whole marketing function? Might this also address the favourite topic of sales and marketing alignment? Sales blaming marketing for lack of leads whilst marketing blaming sales for lack of event followup.

Why are CEO/CFO's not interested in tackling this ongoing challenge?
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RESPONSES

  • Posted by wnelson on 7/31/2006 at 9:20 AM Member
    Robert,

    The marketing function is no different than any other business function. Companies out-source accounting, manufacturing, engineering, sales....

    I cannot speak to why all CEO's and CFO's aren't interested in tackling this particular challenge. What I can say is how this should be addressed.

    When developing a corporate strategy, one looks at the customers, the competition, and one's own core competencies. Those competencies that are unique and allow one to develop a unique selling points and derive a value proposition for customers are the ones that must be fostered. These are the ones that remain in house while this can be said. For the others, it's a matter of economics, energy, and focus. If the firm can develop and maintain the skill in house economically without diluting the company's focus and energy away from the core, then the decision is to go in-house. If not, look outside. Another reason for keeping things in-house which is possibly a myth today is "speed." It's easier to react, so the thought process goes, if I can walk down the hall and stop by the office of a resource. However, with globalization, this becomes less and less feasible and with modern communications, we can talk to anyone, anywhere, any time.

    Porter's Value Chain analysis is a useful tool for determining this. Central to the process is to identify those processes and activities that contribute to customer value and therefore give the firm a competitive advantage.

    For some companies, Marketing is key to the value chain. Think of McDonald's. Are they a fast food restaurant? No. They are a Marketing Machine. You would not expect McDonald's to outsource their marketing. Walmart - they are logistics and purchasing. How important is their Marketing? Not so much, I'd think. But perhaps there are economic reasons why they would maintain their in-house department.

    As far as addressing the issue of sales blaming marketing for lack of leads...well, that's an issue of poor management versus a function of in-house or outsourced marketing. And if you outsource marketing when it is ill-defined and poorly managed, then it won't make it better. Outsourcing only works when you define specific inputs and outputs and manage to those objectives within the process defined.

    I hope this helps.

    Wayde
  • Posted by Frank Hurtte on 7/31/2006 at 9:57 AM Accepted
    Here are a couple of ideas...
    1) why isn't this higher up on the typical CEO-CFO's radar screen? Business is rolling along pretty well at this time. When things are going well, the CEO is looking for other things to address.

    2) my opinion on outsourcing... I believe that outsourcing is an option for special projects, new strategies, etc. But, when the whole marketing function is outsourced, things begin to fall through the cracks, and or, sales function people begin picking up marketing driven tasks. And, often these tasks are make shift andd temporary without a view for the long term.
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