Outsourcing marketing functions

In some organizations, business functions and processes may be deemed prime candidates for outsourcing simply because they are not core to the organization’s main activities. Some functions or processes like payroll, for example, are not only non-core but also the transaction activity is irregular and can be confined to certain periods of the month. In these circumstances most people can see the advantages of outsourcing. Yet other functions are not only non-core and used infrequently, but they require specialist skills that cannot normally be justified for a single enterprise

Into this category come a variety of legal services and a range of marketing activities such as advertising and market research. Most advertising and market research work is done on an external basis with only a relatively small number of major organizations attempting to duplicate these services in house. Advertising agencies in particular need to develop specialist skills in a range of areas, from design of advertisements to media buying and dealing with artists and performers used in commercials. To all intents and purposes, advertising is as fully outsourced as its ever likely to get and the same might be said for some of the services relating to advertising. For example, one company, Donovan Data Systems, supplies 98 per cent of all the computer systems and back up used by European advertising agencies, and has almost the same penetration in North America.

Throughout most of the twentieth century generalized sales organizations have existed that were prepared to provide additional teams of sales people to any organization that might require them. Typically a company needing to increase its sales activity would employ one or more of these sales people in special sales drives aimed at householders or retailers. By the 1950s and 1960s specialist teams were developing in the Western world that concentrated on a particular marketplace and therefore were perceived as up-market operations. The prime example in the UK was Food Brokers Ltd, which as the name suggests, concentrated on selling to the supermarkets and other retailers that included food and related products amongst their wares. The outsourcing of sales activities utilizing people on a face to face basis, did not increase very much over the last half of the twentieth century and there is little evidence that further growth is in the offing.

Marketing departments are being outsourced, but not in sufficient numbers to indicate that a significant trend is taking place. This area is sufficiently sensitive and important for most organizations to suggest that outsourcing ought perhaps to be confined to situations where the client can obtain an equity stake in the service provider.