Marketing has always relied on external agencies to support its mission. This reliance transcends beyond the typical functions, such as PR, advertising, and direct/email marketing, and it is not atypical for many companies (and I am not referring to just early-stage companies) to ‘outsource’ core functions such as product marketing to agencies.
According to a recent IDC study, the program-to-people marketing spend ratio within the technology industry is 57%, and based on what I have seen the true numbers at many companies are likely significantly higher. I believe we are addicted to the flexibility agencies are providing in terms of allowing us to effectively manage our marketing budgets.
While I have not been able to find comparable figures for social media marketing, my discussions with colleagues and peers across the industry seem to indicate that these norms are carrying over to social media, which as I mentioned in an earlier post, is no longer a one-night-stand, but rather a marriage. The core thesis of the 5 myths I had outlined in the post was centered around the fact that social media is inherently different in that it requires a sustained, and trust-based commitment to engage with the audience we are trying to reach. The spray-and-pray, episodic engagement model we have used (effectively?) in the past will no longer work if we are to be successful and create those long-term, trust-based relationships with our audience-the ones that ultimately build customer loyalty and allow us to reach new audiences.
While agencies can undoubtedly add significant value, even in a social world (especially on the creative side), it is the continued use of agencies in core functions that I am most troubled with.
The two core functions absolutely critical to building those relationships are listening (aka finding where our audience is congregating and what they discussing) and engaging (aka orchestrating these conversations). While I agree that many of the underlying technologies are still evolving (you can read my rant here), I still argue this is not a valid excuse for us to be outsourcing such core capabilities. How do we expect to learn and internalize what we are hearing and build trusted relationships if the person on the other end of the conversation is a 20-something hired gun who is also performing these tasks for five other companies? Read this Mashable article for today’s mishap with Chrysler’s social media agency – while arguably this could have happened with a Chrysler employee as well, the incident itself was quite timely.
Do we need to blame our CFOs or simply look ourselves in the mirror and ask whether we are doing what we are doing because it’s the ‘easy’ thing to do? I look forward to your thoughts.
Ted:
while you make many good points above, I think your blog is a little one-sided. Let me play devils advocate.
Ideally, outsourcing should bring the opposite effect of what you describe, instead of outsourcing our brains, it should give us the time we need to use our brains more. Consequently, we can be more creative, strategic and focused on innovation.
Outsourcing should provide the opportunity for high-skilled employees to off-load more menial and repetitive tasks to somebody who is paid less. This makes sense from a financial point of view, plus Outsourcing helps with employee motivation and satisfaction (when less interesting tasks can be off-loaded externally).
You argue that outsourcing core functions is bad and that: “The two core functions absolutely critical to building relationships (via social media) are listening and engaging”.
I disagree. While building a listening strategy and creating an audience engagement plan might be core functions at this early stage in the social media life cycle, continued listening and analysis (plus reporting) and executing an engagement plan = curating content and putting posts on Twitter and FB etc., are not. (I admit, as social media is so close to the customer, there is more to the skill set than just cutting and pasting content; but they are also not eVP skills).
These activities require execution and little strategic knowledge. Why should a person paid for strategic skills conduct these tasks when instead they could use the time to devise better engagement models? There’s an opportunity cost.
In a nutshell, there are two sides to outsourcing in social media and a lot of the time it makes good business and people sense to get outside help.
Best,
Natascha
Natascha,
Thanks for your comments. You are correct in that the primary reason for outsourcing is indeed to gain economies of scale from partners that can free up internal resources for higher value-adding activities. My premise however is that listening and engaging with your audience is a such a high-value activity that we cannot afford to outsource if we want to be successful.
I have no issues in using agencies to learn and shorten the ramp-up curve. My issue is that many companies get addicted to this ‘drug’ and never in-source this capability. The sooner we recognize this, the sooner we will be able to to understand what our audience is looking for and engage with them in an authentic way that represents our brand.
Ted,
Nice blog. I do think that this is not an “either . . .or” scenario, but your point is well taken. There are somethings that the denizens of the marketing organization need to suck up and take on their own. There is no substitute to what the journey of discovering your audience will bring you. Seeing a pie chart of your audience on a powerpoint deck from a 3rd party audit “feels” satisfying and like progress, but it isn’t. The journey of discovery is as important as the destination. However, developing competencies with budget and resource constrained organizations can be just as challenging. The smart use of outsourcing for highly specialized tasks and functions, married with, internal resources feels like the right approach.
Todd,
Thanks, yes the world is much more gray than black-and-white, but my (apparently controversial) point is that we as an industry do not approach this thoughtfully and make the right trade-offs.
I love your comment re: journey vs. destination, and my thoughts are actually that the journey in this instance is much more important than the destination-as we all know, we are so early in the journey, that the destination will continue to be a moving target for years to come.
Ted,
I think this is a hot topic in traditional PR/communications too since I see more content creation being outsourced to agencies, for instance. It might free up internal resources and brain power but it is quite expensive to go this route and I believe that over time, it could potentially weaken the strength of a company’s brand and reputation. I still cling to the old adage that “content is king” and if a company’s own employees can’t roll up their sleeves and figure out a way to deliver incredible content, communications and engagement, maybe they should move on to a company where “delegation is king.”
Tim,
Thanks, you hit the nail on the head, I think this requires an honest debate, I still argue we are doing what we are doing as in industry because it’s the ‘easy’ thing to do and we have been trained to do so over the years. Social needs a very different approach…
Great Blog as always Ted. The key for me is that bringing in expertise for Social Media Strategy is a great thing to do (though there are a lot of people in that market that don’t have a clue what they’re doing).
But for the execution of that strategy – you need real people, not robots. People with content and with personalities. The same people your customers will meet and recognise, and feel empathy for.
And that’s it, right? Empathy can’t be outsourced.
John, thanks couldn’t have said it better myself indeed, perhaps i should change the title of the post to ’empathy can’t be outsourced’ or just hire you to ghost-blog for me:-)
Ted – an interesting debate indeed. Like any decision its got to tie to objective and there are many valid ones:
(1) for outsourcing – improve quality, scale, access to knowledge/talent, reduced time to value, risk management, cost savings/restructuring, etc.
(2) against outsourcing – retain core ip, internal development and learning, cost optimization, etc.
Organizations need to be clear and aligned on objective(s), organize appropriately and the decision to outsource or not should evolve from there.
While I am not condoning addiction (as you put it) there may be an opportunity to organize where listening (finding and reporting the discussion waterholes) is a shared service (Dell like Command Center) or outsourced, however the strategy and actual engagement (orchestrating the conversation) is a distributed business owner driven activity. I am not sure both these activities need to be performed by the same body within an organization.
Ted,
Thanks for your views. I just stumbled upon this article , while searching for a friend who works in Social Media. I totally agree with you , with agencies trying for meatier ( read more money) role of strategy , what would that make Marketing folks at the company itself? Mere paper pushers , is it? Even though majority of experience has been on the digital agency side, I do believe that agencies should focus on execution , creative and messaging strategy but not building business strategy for businesses- coz most of them are not equipped to do that. I am amazed how some programs are driven in name of strategy without much sense of consumer insights and business understanding. But then again the lines of differentiation are fading , how this is gonna be tackled still remains to be seen