Last week, I explored why it makes sense for promotional products businesses to outsource production of ads and marketing materials. But if you have decided that outsourcing might work for you, how do you go about it? Here are some things to keep in mind.
When considering outsourcing, a great place to start is with a review of your marketing plan for the year. It will most likely have a multitude of activities including: your website (maintenance and updates or a complete re-vamp), events you will attend, updates to your catalog or creation of new catalogs, email campaigns, ads on other websites or in print publications, new product launches, announcements, blog updates, press releases, “specials” you need to promote, and more. Some of these--particularly the ones for which you lack in-house expertise, or those that are ongoing and time-intensive--might be prime candidates for outsourcing.
According to Counselor’s State of the Industry report issued earlier this year, 41% suppliers will increase their advertising spend in 2010. With in-house staff being reduced (or at least not increasing), the uptick in marketing activities and media is not easily managed. What new channels or initiatives have you added this year? Is your internal team well-equipped to effectively use these channels for increased ROI?
This situation can be less challenging to manage if you look to an outsourcing partner to support these more production types of tasks. Your in-house team, the individuals you have come to rely upon for their knowledge of your brand, will be better utilized. And, by the way, your artists will definitely appreciate the opportunity to work on only the high-end projects.
There is one very important point to remember here. The outsourcing provider you engage should be your partner. Don’t make the mistake of isolating the outsourcing provider from your core art and marketing group: they should be an integral part of your team. Without this integration, you will not be able to take full advantage of the provider and all they have to offer. And you will incur more work for yourself if you have to manage two isolated teams.
Now let's get to cost. Cost is an important consideration--for some, it is the most important consideration. The cost associated with employing an internal resource is fixed and can be considerable when benefits, equipment, software, and supervisory personnel are rolled into the number. There are two pricing approaches that can be taken – Full Time Employee (FTE) and transactional.
- Transactional--the major benefit to this approach is that transactional pricing is a variable cost and offers considerable savings because you buy only what you need. A “per transaction” pricing model can typically save 30-40% on a yearly basis versus hiring new team members. But don’t forget the partnership aspect that I mentioned before. Just because you are paying for individual transactions, you can still gain the benefit of a true partnership.
- FTE–-the cost of this approach is a set monthly or yearly fee, but is based on offshore costs. Again, the savings is approximately 30-40%. The advantage is that you can fully utilize the resource as and when you need them, similar to the way you would use an internal team member. However, the resource would be managed by the outsourcing vendor, and the systems and infrastructure would also be the vendor’s responsibility.
Either of the above two approaches provide an effective method of supporting your advertising and marketing production needs. The choice you make depends upon the volume of orders that you will require the agent to produce. Careful analysis of your marketing plan should help you decide which route to take.
The key to success is realizing that outsourcing is a process, not a product. You need to work with the provider to make sure they understand your business and your needs. If both parties commit to engage in open dialog, regular and frequent communication via conference calls with key team members, and regular performance measurement, it becomes much easier to realize benefits from the partnership.