Business management teaches that the company that tries to do everything in-house will spread itself too thinly, do most things badly and lose sight of its core values. That’s why many engage partners to perform functions that aren’t brand differentiators, such as IT activities or payroll management. This brings new efficiencies through economies of scale (the external firm has better resources and specialist expertise, but can spread the cost between multiple clients) and ensures the job is done well.
Marketing and PR agencies have long used this argument to win business offload your marcoms activities to the experts so that you can focus on what you’re good at; namely, creating something worth marketing. But how wise is it to entrust your core customer messages to a third party, whose financial incentives may not be as directly linked to your business’s success as they might like you to believe?
Which activities are ‘safe’ to outsource and which are sacrosanct and should be controlled internally? And once you’ve divided up your activities between in-house and out-of-house, how do you ensure the best results? In this feature, B2B Marketing outlines both routes.
For a small business with limited resources and an immature brand, it’s often tempting to keep marketing as a modest affair because you’re not sure how you’d brief an agency and there’s only so much new business you can handle at one time.
Nigel Davey, business development manager at IT service provider Managed Networks, feels his business is typical of many smaller enterprises in its slightly haphazard approach to marcoms, most of which is handled internally.
Its main marketing activities are business networking and Google Adwords. Managed Networks spends around £2500 a month on the latter as well as a couple of hundred on tweaking ads and building click-through rates through ‘natural’ search engine optimisation. An external agency now helps with this simply because Davey no longer has the time. The arrangement works well, bringing Managed Networks an average return of 16:1. Davey is happy to use a partner for this practice because he sees it as a routine activity to which there is little creative input required.
This means Davey can devote his time to strategic networking. He is a member of Ecademy, Linked In and Business Network International (BNI), a weekly breakfast networking group, and feels these activities are fundamental to the company’s profile building and growth.
Clearly, this is not something that can be outsourced. Davey spends three hours of his time a week on BNI activities alone – half of it in meetings and half looking out for opportunities to promote fellow members to potential new clients. (This particular club works on the basis that there can be only one member per vertical market in a given group.) “For every £1 we spend on this activity, we get around £50 back, so it’s a good use of my time,” Davey says.
For everything else, he’s happy with the company’s ad-hoc approach to marcoms. “I’m a great believer in pay-as-you-go marketing,” Davey notes. “You can start small and cheap, but grow activities as they prove themselves successful. PR would need a substantial budget to be effective.” We do a bit of this on an ad-hoc basis but for us, it’s a cost issue and we can’t justify it on a regular basis.”
When online office supplies company Euroffice considered an external agency for email marketing following a period of fast growth, it quickly decided against it because it too felt it needed to retain internal control of what was a critical aspect of its marcoms.
Says the firm’s MD, George Karibian (as pictured), “We evaluated potential solutions on the basis of two key points: what will this approach teach us, and what will happen as we continue to grow?”
Keeping the activity in-house (using an email tool from Lyris) proved to be the right decision. “Our staff are passionately engaged with the business because they are constantly learning and advancing their own skills and subsequently we have developed a team of highly educated people on the cutting edge of online marketing,” Karibian says. “Handing everything over to an agency, from creative to tracking, wasn’t what we were looking for.”
The company takes a similar approach to all of its marcoms activities. “We keep up to date with best practice, latest trends and measure everything we do. If we outsource anything, it must meet our two evaluation criteria. The solution must offer us a chance to learn, and get involved with the activity on a more granular level. Secondly, it must be a solution that is going to help, not hinder our growth.”
For companies that do prefer to retain internal control, it is important to apply best practices to ensure this policy pays off in the way you expect.
This means having senior buy-in; a long-term vision; key goals; a defined strategy; a dedicated budget; project management and governance; and a means of measuring success.
You would expect nothing less from an external agency, so why let your standards slip if you’re doing it yourself?
Phil Marris, MD of Jaga Heating Products, which supplies heating products to schools, hospitals and office buildings, feels governance is critical, whoever is doing the marketing.
Jaga uses an external agency to manage the majority of its promotional activities, but uses the firm as though it was an extension of its own team, placing responsibility for higher decisions with its account managers.
The agency, Mulberry, has been eased into this position as it has grown to know Jaga’s business. For Marris, it is now as though Mulberry is a part of Jaga, so he believes his strategy for managing the company’s marketing activities would apply equally if his own team was handling the work.
“We could afford to have our own marketing department now, but our core business is heating products and Mulberry knows what we need so it doesn’t make sense to change; as far as we are concerned, Mulberry is our marketing department.”
This means that Mulberry takes ownership of marketing projects, subcontracting to other specialists anything that falls outside of its core competencies. “It is they, rather than we, that sources the services we need and manages the relationship to ensure quality,” Marris says.
“It’s not about cost,” he adds. “If I had the time to recruit people with the right skills and experience internally, I might save money, but this way I save my time and benefit from a specialist service.”
Of course, agencies bring not only qualified experts to the table, but also a rich portfolio of contacts. PR companies have good relationships with editors and journalists on target magazines, while design houses can secure good deals and rapid turnaround with printing companies. These factors cannot be underestimated.
On this basis, Marris says there is little he wouldn’t outsource. “We do keep some Internet directory presence in-house and we receive first-stage response to enquiries, but there’s no reason we couldn’t outsource those activities as well,” he says. “Otherwise we already use Mulberry for pretty much everything – PR, events and exhibitions. Even if we did internal newsletters, I’d be inclined to talk to Mulberry about the options first.”
Companies nervous about losing control of their messages could choose to retain content control by using internal writers or develop relationships with individual copywriters who grow to know the business. This may give confidence where businesses are worried about staff changing accounts or switching companies across the lifespan of a relationship with an agency.
So what do agencies advise to ensure companies get the most out of their outsourcing arrangements? Ellen Perton (as pictured), creative development director at incentives and motivation agency Archer Young, says, “Most agencies have a similar plea – share as much information as possible. Think about your objectives in terms of return on investment, share your budget constraints, let them know what changes in behaviour you are seeking.
“If you’re undecided whether to outsource, ask the agency to outline reasons why. Costs should feature near the top, but other factors might include creativity of approach, application of techniques from other industries, reduced set-up times and access to tried and tested methods.”
Tor Goldfield, head of professional services at PR agency Midnight Communications, adds, “Set clear objectives so all parties are aware of what constitutes success or failure. Regular contact is important and senior spokesperson buy-in is vital. Senior staff will often be called upon to play a role in the campaign through journalist interviews for example, so the greater understanding they have of goals and objectives, the more positively they will be able to contribute. Media training can be invaluable in enhancing this process. “Finally, it always helps if clients and agencies socialise outside of work. Organised events such as after work drinks or activities such as go-karting can provide a real bonding experience.”
Which just goes to emphasise that success, as in other areas of business, comes from people getting on with other people, whether they work internally for the same company or on a virtual basis through partnership. The approach to managing either marketing strategy should be the same.
