Thursday, November 15, 2007

Outsourced Agencies - Good or Bad?

One of the major tech companies is currently looking to put all of its marketing with one agency. It has currently asked two of the large agency groups to create an agency that will be dedicated to its business and handle all aspects of marketing from online advertising to research to PR. On paper the tech firm stands to do well out of this as the two agency giants tussle to offer the best value and brains. But to my way of thinking there are several issues that should concern a firm when they go down this path:

1. When you outsource all your marketing to one firm you are effectively signing them up for a VERY long time as switching is going to be even harder. So you had better be really sure you like the key people involved AND that that they will stay around.
2. The savings on the bigger pieces of the pie like advertising will likely be substantial but for the smaller pieces of the puzzle, lower cost will only mean lesser talent.
3. It will be tough to get people to work at this dedicated firm without throwing a lot of money at them (which seems to defeat the aim of the exercise). People who want to work at agencies typically do so because they want broad experience not to effectively work in house by having only one client.
4. One of the advantages of having an agency is that they work on other clients and are continually coming up with new thinking and new opportunities. These would likely dry up in a one agency scenario.
5. Integrated marketing has been around for ages and yet hardly anyone does it. Even those that do tend to have big areas where they make exceptions on the agency front. There has to be a reason why this approach hasn't been adopted by all the major corporations around the world...

Now I know there are some who will say that I'm in no position to talk given we have a business that offer a global solution for clients. I'd argue that we only offer them PR and relevant research. We don't try and offer them the entire solution.

When this tech firm makes its decision there will likely be a lot of speculation that others will follow. My suspicion is that some will watch to see how it works but I doubt many will immediately copy it.