Why is outsourcing marketing and communications functions and processes so common?

Outsourcing marketing and communication, partially or comprehensively, consists of delegating specific functions to external companies or professionals instead of carrying them out entirely with internal staff. It is an increasingly common practice in the business world and is fundamentally driven by the need to access specialized knowledge, gain scalability without compromising fixed expenses, access services within a framework of greater flexibility than that provided by labor legislation, make organizational operations more efficient, and incorporate external perspectives.

When we talk about marketing services outsourcing, we are not referring to a completely new phenomenon. Not so long ago, we know that advertising and creativity have been subcontracted to agencies for decades. Many major brands throughout the 20th century entrusted their campaigns to external advertising agencies while maintaining small internal teams on staff.

Over the last two decades, marketing outsourcing has expanded and accelerated due to various structural factors that are worth knowing and understanding well. It is not just an effect of increasing digitalization, which naturally also plays a significant role, but rather a trend that connects with many other changes that are occurring in one way or another in our societies.

Structural motives and catalysts that explain the phenomenon

We can observe an evolution from entirely in-house marketing management models towards a hybrid outsourcing model that, while at one point could be explained mainly by the need to reduce costs, has ended up being explained more by needs that contain greater complexity in themselves. Here we list some:

• Digitalization and growing complexity: The explosion of the internet, social networks, and digital marketing since the 2000s has multiplied the functions that any marketing department must cover. New specialties that didn’t exist have emerged (SEO, SEM, advanced digital analytics, CRM operations…) and the pace of technological innovation has only accelerated. This expansive process has generated a rich ecosystem of specialized marketing and communication agencies with the capacity to complement their clients and cover all those needs that they were not able to resolve with internal resources.
• Globalization and access to foreign markets: The opening of global markets has been a historical driver of marketing and communication services outsourcing. In the case of European industrial companies, this has been a particularly marked reality. When a manufacturing company begins exporting to many countries, tasks related to market access increase substantially (technical documentation translation, manual and labeling adaptation, new catalog design, campaigns in different languages directed at different audiences, local market research…). The more foreign markets a company intends to cover, the greater tendency it will have to rely on external suppliers for marketing, communication, and commercial support functions. In general, the availability of efficient external suppliers reduces export costs and facilitates small and medium-sized manufacturers’ ability to internationalize with a greater degree of success.
• Economic pressures and post-crisis reorganization: During and after economic crises or in moments of cycle change, many companies review their expense structure and act to adapt it to their needs. Without going too far, in the post-COVID pandemic period, there was a wave of service outsourcing by medium-sized companies that had never before resorted to this type of organization of their operations. This was explained by a Grant Thornton study in mid-2021 regarding the Spanish market. We are transitioning towards a business culture where service outsourcing has gone from being perceived only as a cost reduction measure in times of crisis to becoming a stable strategic piece.
• Changes in marketing organization: Parallel to all the other processes explained in this section, companies have been modifying how marketing departments are conceived. Many historically separated functions (internal communication, customer service, strategic design…) have been fitted under the marketing umbrella and the importance of these departments has grown.

Marketing operational models have evolved towards more flexible and hybrid structures. A McKinsey report from late 2024, highly recommended reading to understand what we’re talking about, highlighted that building an adequate ecosystem of partners is a critical necessity in modern marketing.

In summary, marketing functions have disaggregated into a network of competencies and specialties that in most cases force companies into a task distribution between external teams and internal teams that, when well coordinated, have the capacity to face the rest of the market. The structural motives and historical evolution show us a paradigm shift that leads towards building alliances and balances that, seeking operational excellence, generate new risks such as possible loss of internal knowledge in the long term, which previously did not exist or did not have the threat category they may currently have.

Current trends and relevant cases

Europe is currently one of the growth engines of global supply. According to research firm Everest Group, the global outsourced marketing services market grew at a rate of 12-14% annually from 2016 to 2022 and this pace is expected to accelerate to a CAGR of 20-24% between 2022 and 2026. This robust development is largely attributed to continental Europe and the growing demand posed by industries such as technology, electronics, or media.

It is identified that B2B companies show a greater tendency towards outsourcing than those that orient their marketing strategies towards end consumers. The CMO Survey already highlighted this trend in 2012 and a very recent survey by Marketing Week confirms that 67.5% of B2B brands tend to outsource functions to agencies compared to B2C types that only reached 60.2%. It can be understood that this is logical insofar as industrial-type companies or those focused on selling products to other companies usually have lighter marketing structures and therefore require greater external support to carry out specific actions or to consolidate recurring processes. In contrast, B2C companies have larger teams and show a greater tendency to outsource creative tasks, work peaks, or specific projects. The boundaries of all this keep moving but we can perceive trends and regarding outsourcing, they are more marked in the B2B world than in B2C.

In Spain and especially in Catalonia, where the business fabric has great weight placed on small and medium-sized industrial companies, the outsourcing of marketing and communication services has gained prominence especially following digitalization programs promoted by administrations after the pandemic. Despite the weight these types of programs have had, surveys already indicated that many small companies chose to collaborate with external agencies as they could not internally assume the hiring of specialists.

The most traditional forms of function outsourcing had to do mainly with those that had a very marked support character (IT, payroll, tax and financial advisory, legal services, or human resources), but the context has varied and the marketing and communication agency sector has experienced a growth cycle that is very difficult to ignore. If we forgot about all other specialties and thought only about what the web development market has meant over the last 20 years, we would already have a very clear sample of the extent to which digitalization-related services have impacted the economy.

Germany itself, with its celebrated Mittelstand (small and medium-sized companies leading industrial niches), traditionally started from a more conservative approach where most companies kept the vast majority of key functions internally, including technical marketing and client communication. However, the rigors of digital transformation and its inherent complexity have caused service outsourcing to be notably increasing in recent years. Already in 2019, a study conducted by Social CRM Research Center in Germany noted that approximately 50% of the country’s small and mediumsized companies already outsourced some marketing activities to digital agencies, a high proportion that has undoubtedly grown in recent years. The reasons German companies cite are similar to those of other countries but with special emphasis on improving customer service, seeking higher quality through expert supplier support. To expand a bit more on all this, it is interesting to analyze the studies and articles of the Deutscher Outsourcing Verband.

Another interesting context for analysis is Italy, a geography also characterized by an economic model closely related to a powerful structure of small and medium-sized industrial or agri-food companies, often family-owned. Traditionally, many of these companies kept marketing totally at the internal level and relied on commercial agents or distribution companies. Following the global market path, B2B marketing at the Italian level has tended towards function outsourcing and in the heat of this, an important agency structure has emerged and consolidated. Italian business culture, which has much to do with personal and trust relationships, has led many small and medium-sized companies to seek trustworthy marketing suppliers with whom to collaborate long-term. Rather than specific contracts, they tend to establish stable collaborations with agencies or consultants who specialize in sectors or even specific companies.

Regardless of the country or sector we study, the boundaries between internal teams and external teams tend to blur. The market advances towards collaboration models where external suppliers act as a natural extension of internal marketing teams. Communication and trust will continue to be decisive factors for sustaining fruitful long-term relationships.

Cost reduction or strategic lever?

For most companies, it is not viable, practical, or profitable to have a full-time SEM specialist or SEO consultant or even a graphic designer on staff. These are just 3 quick examples that explain quite clearly that it’s not just about addressing a cost reduction problem but about the possibility of accessing talent that would not otherwise be available. And this without talking about the cost related to various technological licenses that are not assumable without a purchase linked to an extensive operation with exposure to multiple projects and clients.

As is evident, pressures for cost reduction also play a role in this whole story, but they are not currently a compelling reason that can justify the growth in communication and marketing services outsourcing. But currently the reality is that outsourcing is synonymous with competing with more guarantees in the global market.

Far from being a fad, the growth in the supply of specialized marketing and communication agencies is the structural response to an environment where marketing is more important and at the same time more sophisticated than ever. The key to success, execution aside, lies in identifying what to outsource and what to retain internally. The sources consulted for this article’s preparation (from academic studies to reports from major consulting firms) indicate that, when well managed, good marketing outsourcing allows companies to focus on their core business while delegating to one or more agencies part of the tasks related to selling their products or services.