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OUTSOURCING
MARKETING COMMUNICATIONS AND By Jon Boroshok $4 per gallon gas, an upcoming presidential election, and economic turbulence make late 2008 challenging times for any company trying to win positive media coverage, but business moves ahead. What's really scary is seeing how many companies are still following PR strategies that go back to the dot-com heyday. A startup or early-stage company that has a strategic or technological edge but a thin PR budget can communicate effectively if their agency is innovative, resourceful, tech savvy, and not wasteful. Unfortunately, many companies and investors still are not quite sure how to select such an agency. Using a rationale that paralleled the old adage, "nobody ever got fired for picking IBM," companies often retain a "brand name" PR agency with a posh downtown address. They often wind up paying for the name of a CEO who doesn't work directly on their account, and typically hasn't contacted a reporter about a client in years. A little history lesson may be appropriate. Back in the "irrational exuberance" of 1999-2000, the large agencies found new ways to hype, oversell and overvalue their services. They pushed bloated, expensive retainer packages stressing their own "brand" rather than tangible results, expertise, or efficiencies. Investors were dazzled by big names rather than value, and clients wound up footing the bill for the training of very junior practitioners. These days, truly competitive companies know to look "outside the box" for better value from PR and other marcom agencies and service providers. I understand the laws of supply and demand and free market economies as well as any other MBA, but what I don't understand is why the agency that commanded a $15,000 retainer just a few years ago now offers the same services at fire sale prices. Are the agencies using less experienced staff now, or were their rates over-inflated then? All too often, staffers performing the actual account work tend to be young and inexperienced, because that's where the agency's profit margin is based. Clients can now get more for less by eliminating many traditional agency inefficiencies such as downtown offices with expensive views, rigid 12-month retainers, the marking up out-of-pocket expenses and outside vendors, and under-qualified junior agency staff. Economically-astute companies have started outsourcing marketing communications to battle-tested veterans who can pick up the slack and provide services on a smaller, flexible scale, often on a project-basis. Experienced marcom professionals bring core competencies that enable them to do a better job in less time, thereby reducing costs and maximizing results. These smaller ("boutique") agencies, virtual PR teams, and individual practitioners are a growing alternative for companies of all sizes, particularly those with monthly marcom budgets of less than $5,000. Like their clients, these outsources have to work smarter, faster, and cheaper. Is retaining the services of a large agency really a prudent investment, particularly in industries like tech and the life sciences, where every marketing communications decision can affect millions of dollars? Working on a project basis often clashes with the business model of a large agency. There are many overhead costs that must be passed along to the client, and large agencies need steady retainers to make sure financial goals and obligations are met. Alternative marcom providers find ways to efficiently service smaller clients and produce results. For many clients, outsourced and project-based marketing communications has an economic rationale even in a strong economy. It makes sense to find a marcom outsource that will work on a project basis, or adapt to a flexible, needs-based budget that allows clients to pay for services on an "as-used" basis. It allows companies to do more short-term activities without a large commitment. If a project proves successful, it can lead to longer-term relationships. Projects are a great "test drive" for both the agency and the client - a way to see if they enjoy working together.
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