Out is the in thing

Outsourcing is coming into play in the UK marketing industry, but are outside contractors going to win this game hands down or is it simply much ado about nothing? asks Ian Whiteling

Six months ago, Simon Bartle was UK marketing controller at Diadora. Having successfully secured deals with several football clubs in England and Scotland, the company’s strategy to strengthen its presence in UK football was progressing. So why did Bartle leave? Was he another victim of the outsourcing trend sweeping through the UK marketing industry?

In a way he was, although he actually left Diadora to become part of that trend. “Having been with the company for three years and with experience on the agency and client sides, I wanted to do something different,” he explains. Bartle could see that companies were turning more to external resources to fill certain marketing roles. His consultancy, Get Real, is now providing an outsourced marketing function for several clients… including Diadora.

Bartle’s new agency was set up to take advantage of the popularity of outsourcing in the UK marketing industry. One area particularly susceptible to the phenomenon is direct marketing.

Independent research commissioned by Astron, well known for its position as manager and processor of the National Suppression File for the Direct Marketing Association (DMA), shows that the outsourcing of database marketing and customer relationship marketing will grow by ten per cent over the next two years. More strikingly, For

rester Research forecasts that, by 2005, companies will be outsourcing 75 per cent of work in the UK.

Why do it?

So what factors are driving this trend? First, a tough economic climate has led to many companies trimming back their marketing departments. Agencies have also suffered as budgets are slashed. Furthermore, growing companies that need to increase their marketing activity are reluctant to create a marketing department from scratch.

There is also the question of deadlines; for instance, growing companies do not set up a marketing department when their immediate need is for a direct marketing campaign to start immediately. Outsourced marketing is a quick-fix solution.

“Keeping the direct marketing function in house appears cheaper as the cost is absorbed internally, in comparison to a business that chooses to outsource where the cost becomes clear and appears more expensive,” comments Design Group joint managing director Dan Vivian.

Carolyn Stebbings, managing partner client services at DP&A, adds: “Clients that commission an agency will save money because they pay on a project or volume basis agreed ahead of time and are not liable for associated personnel costs such as holiday, sickness and redundancy.”

Vivian is also adamant that outsourcing is a better way to create more effective and innovative campaigns than an internal department that does not have to strive to do the best it can for its client. “An agency is ultimately answerable to its client and so always aims to go that bit further,” he says.

Outsourcing is also beneficial in terms of flexibility because using an agency means clients can turn the direct marketing resource on and off, says BI Group director of marketing communications Jo May.

Claire Syrett, head of new business at Craik Jones, adds: “When clients go through a quiet period, they don’t have to deal with the salaries of a large department.”

Stebbings also highlights that outsourcing can add value, because by using an agency which specialises in direct marketing clients not only have account handlers and specialist creatives at their disposal, but they can often get the insight of other marketing directors and clients of the agency. “This sort of service wouldn’t be possible if the direct marketing function was dealt with in house,” she says.

But the rise of direct marketing outsourcing doesn’t spell the end of marketing departments. After all, most will probably have been trimmed already and many direct marketing agencies work alongside a company’s existing marketing workforce.

“The client is still the ‘owner’ of the brand, knows the product and ought to be contributing to how the product or service is developed to meet customers’ needs,” says May. “Marketing is much wider than just communications. It is about brand, product, positioning, pricing and distribution, as well as driving customer value. An agency can provide clear strategic thinking, planning resources and expertise, as well as operational implementation, but the client’s own marketing team owns the overall strategy.”

Team spirit

In support of May’s comments, Syrett says: “The best campaigns emanate from a strong agency and client team, and it is about playing to the strengths of each part of the team. Good campaigns need marketing clients who are working at a senior level within their organisation, enabling them to give clear direction to the agency and also to take what are sometimes courageous decisions with communications.” Wales Tourist Board director of marketing Roger Pride comments: “It is vital to retain ownership of the overall strategy. However, we outsource specialist functions such as direct marketing. It is vital that we have access to the best planning and creative skills. A good direct marketing agency should provide clients with objective expertise, creativity, innovation and a fresh perspective.”

MSN UK head of customer satisfaction Matt Whittingham is also pro outsourcing. “One of the primary reasons that we outsource our direct marketing function is that we aren’t direct marketing experts so we need to find a partner that is,” he says.

Direct marketing outsourcing is here whether we like it or not and it can add significantly to a company’s marketing skills and raise its profile. However, it is most beneficial when married to a strong internal marketing presence, to lay down the long-term strategy, provide the expertise to select the right agency and then closely monitor its progress. Young, growing companies with little experience in dealing with external agencies should be wary of the inherent problems of spiralling costs that can ensue if a direct marketing campaign is not well planned from the outset.

“If you’re considering outsourcing then you need to get the direct marketing agency in at the outset, particularly in field marketing where people are directly involved,” advises Alison Williams, chairman of the DMA Field Marketing Council. Having the agency involved from the start is useful when setting timelines, which once decided upon should be stuck to.

Williams also advises caution when choosing an outsourcing partner. “If you have not outsourced before then track down the relevant national body on the internet and select three or four possibles,” she says. ” Then meet with each agency to establish that you can work together.”

Despite the benefits of outsourcing, it also pays companies to make sure that in-house marketers are trained in the latest direct marketing techniques. Outsourcing is likely to produce better results as an add- on, rather than a replacement.

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