12/02/2019 Marketing Capabilities: In-house Vs Outsourced Marketing Dept.’s way of working with their agencies is changing. With near real time availability of huge data on rapidly-changing consumer behaviour. And the continuous re-defining of what’s possible. It's time for marketers to make a call on what marketing capabilities should be in-house as against outsourced. Changing Capabilities - But No Clear Model For many decades, Marketing Departments had a very specific set of KPIs: Drive down the cost of media & outreach activities Communicate more effectively with better creative content Increase overall efficiencies Naturally, many generations of marketers & agencies developed capabilities based on the above KPIs (which brought them success). But the past few years have made it clear that the same capabilities will not work as well in the coming years. The new requirement is to be able to connect immediately with consumers, understand & meet their expectations - which are constantly changing. For this, marketers have to determine what new core capabilities they need. (The same applies to agencies.) Today, controlling media is less important than tuning into, responding & managing consumer experience. The new job profile of “Chief Experience Officer” is a reflection of the fact that it's possible to track customer decision journey in real time. This also suggests that tracking the consumer journey will be the chief method of measuring efficiency of any media campaign/customer outreach exercise.But while there are concerted efforts underway to link Purchase & Billing data with CRM & Experiential data*, there’s no clear model for all this as yet. * For an example, refer SAP's recent acquisition of Qualtronics End of the AoR? In a world of super-specialisation, the “AoR or (single) Agency of Record” model is obviously not the most efficient - as a single agency is unlikely to excel in everything. The marketing ecosystem has exploded with new channels & the entry of a multitude of players - all of which gives more choice but adds complexity for marketers. (Likewise, agencies also need to partner with “frenemies” to deliver desired end-outcomes to marketers.) Content Is King! From around 10 types of marketing activities & media (channels), today there are 50 - 60 types of channels. And from a dozen or so target audience groups, today you can break up the digital market into thousands of micro target groups. Marketing teams need to manage this without getting swamped!With such complexity, the importance of story-telling techniques has become all the more important. Both social and digital media permits marketers to tell one story at a time to each one of a thousand+ consumer groups. This obviously increases the marketer’s investment in fresh content, but allows them to give appropriate “spins” to their stories. Thus narratives have multiplied, with their lengths becoming shorter. In-house Or Outsourced? So, the questions Marketing Teams need to ask are these: What are the (new) core capabilities required for our specific business vertical? What core capabilities should we build as in-house, as against outsourced (which is today's norm)? Building in-house core capabilities is major shift because it involves a mid-to-long-term commitment. There is a 'buy-in' required from the organisation's technology layer, without which nothing moves today. This layer broadly comprises of IT investments, long term IT objectives, IT security, IT support & integration with the (evolving) ecosystem. But the shift to in-house is serious - so much so that will affect the he DNA of an organisation over a period of time. Obviously, all this involves some new responsibilities & new risks for the Marketing Team. Hybrid Model At the end of the day, things may not boil down to a simple “Outsource” or “In-house” choice - it may more likely be a balance between the two. A good example is content creation: Build an in-house content studio to give Marketing the ability to explore, experiment & build new & different content/formats Continue to work with the best studios in the industry Pair an in-house studio team with a set of external specialists to help create radically different content Similarly, Marketing could set up social media listening centres as a combination of: Full-time staff Deputed agency staff & Rotating external specialists The idea is to integrate in-house capabilities with fresh outside talent. Data Analytics Data Analytics is already too clichéd - but is still not understood by all Marketing Teams. Even today, there are 2 kinds of Marketing Teams: those that have data, understand its power & are able to manage it internally. And those who do not.Marketing Teams need the data along with people who understand data - to read the numbers & figure out the opportunities/threats & insights. For this, Marketing must: Develop a “data culture” Apply an “R&D” approach to data analytics ("R&D" permits an experimental, high-risk/high-returns approach.) Role of Systems in Marketing All this complexity must reflect in simple-to-use marketing workflow systems which communicate with other systems. Automating workflow between Marketing Dept.’s systems, agency partners’ & their systems & the continuously evolving ecosystem. Marketing systems must allow: Product managers to control budgets dynamically based on key results Senior management team to view key financial & ROI statistics Audit teams to conduct their practice in parallel Integration with Finance, CRM Integration with Agencies, Digital Marketing, Vendors Integration with Industry Databases Constantly evolve The goal is to have constantly evolving open-design systems that Marketing Team & it’s partners can use to manage the complexity.