Outsourced marketing is the transfer of responsibility for the promotion of a company's product, service or brand to a third party. All promotion activities or a few of these activities can be outsourced. End-to-end outsourced marketing campaigns are synonymous with marketing process outsourcing, which is the outsourcing of an entire process. Companies can also outsource discrete marketing tasks to support internal marketing departments.
Definition of Key and Related Terms
Outsourced marketing allows organizations to extend their capabilities and leverage the knowledge, experience and resources of an entire marketing department. One of the main advantages of outsourced marketing is quick access to marketing expertise without the need to invest in infrastructure or full-time employees. As marketing experts, marketing service providers employ techniques based on research and analysis of trends, consumer behavior and market segmentation.
Marketing outsourcing can be categorized by function: advertising and brand management, digital marketing, marketing research and analytics, and sales.
Advertising and Brand Management
Advertising and brand management activities include traditional creative services and campaign design, campaign management, and lead management. Print, television and direct mail advertising are some of the mediums of communication between business and customers.
Also called internet marketing or online marketing, digital marketing encompasses all promotional activities performed via the internet, including search engine marketing and social media marketing. Digital marketing aims to target its audience more precisely using web analytics and consumer data culled from online activities.
Marketing Research and Analytics
Sometimes called left-brain marketing, marketing research and analytics refer to the number-crunching process behind promotional and sales campaigns. Research and analytics activities include data analytics, which is the analysis of program performance, customer behavior and brand health.
The main goal of sales activities is to increase sales volume of a product or service. Traditional sales-oriented marketing does not consider consumer desires; it is concerned with moving products and achieving target sales goals. Modern sales approaches rely on consumer buying behavior to boost sales.
Outsourced Marketing Orientation
Outsourced marketing service providers adopt many approaches to marketing: relationship marketing, business or industrial marketing, societal marketing, and branding. Relationship marketing (business to consumer or B2C) is focused on the consumer and aims to build and maintain great customer relationships, while business/industrial marketing (business to business or B2B) is concerned with building and sustaining relationships between two businesses. Societal marketing aims to benefit society and mitigate harmful effects of production and sales, while branding focuses on building and improving brand value.
Outsourced B2C marketing refers to promotional services aimed at consumers. B2C marketing service providers in a consulting capacity may undertake analysis of buying behavior to determine the consumer mindset during the purchasing process. Service providers also perform customer satisfaction tracking, analysis of repurchase behavior, and sales analysis to determine whether the marketing campaign is working or not.
Outsourced B2B marketing refers to promotional activities aimed at organizations. Businesses differ from consumers in terms of buying behavior. Enterprises usually buy in bulk from other businesses or directly from the manufacturer. B2B marketing service providers perform brand management, sales, analytics, and online marketing in behalf of an organization, with the service directed towards building and maintaining relationships with other organizations.
Outsourced Marketing Services
What marketing service to outsource typically depends on the size of the company and the number of products or services. Startup and small business owners often perform the role of general marketer, doing everything from design to traditional/digital promotion and analytics. On the other hand, medium-sized businesses and larger organizations tend to have specialized marketing roles. For example, product design/development staff handles concept and functionality, the creative team designs promotional campaigns, and the product marketer handles pricing. Outsourced marketing service providers can assume responsibility for all of these tasks and bundle them into a comprehensive package or offer discrete and customized services depending on the client's needs.
As customer choices evolve, companies find that they must change and master their marketing strategies to capture and retain consumer attention. Businesses of all sizes and across industries are increasingly turning to third parties to better adapt to an ever-changing market and meet challenges. Compared to the hiring of ad agencies to perform traditional marketing activities (print, direct mail, telephone, radio and TV), outsourced marketing is a fairly recent phenomenon. It is an offshoot of the outsourcing movement that started with information technology services in the early 1990s.
Companies followed the path of traditional marketing, initially outsourcing creative tasks like promotional campaign design, website design and content development. The next generation of marketing outsourcers added analytical and strategic operations to the menu. Today, many companies outsource marketing for strategic reasons and to gain a competitive advantage through innovation. Clients are also demanding more value from providers. In response, vendors are offering higher-value services and continuous improvements. For example, some providers offer software that tracks customer interactions, sends out targeting marketing messages and changes prices based on product inventory. However, some vendors still specialize in transactional marketing services like call centers and sales force staffing.
In 2004, Forrester Research reported that 53 percent of survey participants wanted to outsource more than half of their marketing activities. A study also found that marketing outsourcing revenues grew by 7 percent in 2012 despite the economic downturn. The demand for marketing experts is projected to rise as emerging technologies and the internet make traditional methods of promotion less effective.
The case for outsourced marketing is clearly strong regardless of industry. Some of the top reasons for partnering with a third party are cost reduction, process improvement, and access to analytics and management expertise. Outsourced marketing providers deliver multiple benefits such as low production costs, greater reach, dynamic digital marketing, content recycling, and flexible distribution processes. Those that offer dynamic solutions that deliver better value over time attract clients who are more focused on strategy.
Basic Flow of Outsource Marketing
Outsourced marketing is different from hiring a traditional ad agency to perform creative services. Marketing outsourcing vendors offer a comprehensive list of services and employ the latest technology to understand consumer behavior and market segmentation. Today's service providers allow clients to build and maintain relationships throughout the purchase cycle.
The outsourced marketing process begins like any other outsourcing arrangement. The client conducts an evaluation (internal and external assessment) to determine the organization's current capabilities, needs, goals, and marketing activities that need to be outsourced. Once the client establishes a case for outsourced marketing, the service provider develops a custom plan that fits the client's needs and budget.
The service provider will usually ask the client to fill out evaluation forms for internal and external assessment. Responses to the internal assessment will determine what skills the client has in house and what skills need to be brought in. Responses to the external assessment will provide a clearer understanding of marketing roles that can be better performed by a third party. The external assessment also helps determine the type of outsourcing provider that best fits the organization's short- and long-term goals.
After the evaluation, the service provider will develop plans and budgets based on the responses to the questionnaire. There are different types of outsourced marketing contracts; the client may adopt an end-to-end approach like marketing process outsourcing, subcontract parts of its marketing activities or hire offshore marketing staff. For example, the client may only want the service provider to undertake digital marketing while the company performs marketing software development and analytics in-house. The plans are presented to the client, who will review them and approve the best fit.
Once the contract is signed, the vendor undertakes management of the marketing department or of specific marketing activities. The client may meet with the marketing staff in person or through videoconference (for offshore engagements) and work closely with them throughout the outsourcing campaign.
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