By Preetam Kaushik
Most outsourcing participants are familiar with acronyms such as BPO, KPO, and ITO. However, there is another emerging outsourcing acronym, which is MPO, or Marketing Process Outsourcing. MPO refers to the outsourcing of all activities and processes associated with the marketing function.
MPO: Concept and Practice
To understand the MPO concept better, think about the calls telemarketers make pitching various products and services. This is a basic form of MPO, although the concept extends well beyond sales and lead generation to include the whole gamut of marketing activities. What this means is that MPO is a term that encompasses the traditional sales and marketing function, with a span of control extending to branding, liaising with the media, managing the public relations function, market research and marketing consultancy. In short, a vendor who provides MPO services is expected to take over all the marketing activities of the client and ensure that the end to end marketing activities are handled by the vendor.
SMEs Present Lucrative MPO Opportunity
Though the MPO industry is nascent, with the revenues from this sector totaling a few million dollars at the most, the market is expected to grow with the inclusion of the Small and Medium Enterprise (SME) sector into the MPO orbit. This is expected to change in the coming years because of the need to cut costs due to the fragile economic situation and since the gloomy economy puts pressure on bottom lines, companies, and SMEs in particular, seek whatever cost savings they can get.
For example, since according to an recent article in SME Times India has about 26 million SMEs and 70% of these do not have adequate marketing processes or expertise in the marketing function, there is an untapped market worth billions of dollars in India alone. However, these are early days yet and except for a handful of companies, there are not too many vendors in the MPO segment.
Quantifying and Qualifying MPO Benefits
Considering the fact that most marketing functions in many companies are staffed with temps and contractors, it makes sense to outsource the whole process to third-party vendors and ensure that there is rationalization and optimization of costs. Coordinating with multiple agencies and maintaining relations with the media, two activities that take up most of the marketing department’s time can be optimized if the process is outsourced.
Since the vendors operate by taking advantage of economies of scale and leveraging the synergies of combining all the activities, both the client and the vendor end up adding value to each other. Furthermore, the clients are left with enough time and bandwidth to concentrate on their core functions and not worry about whether their marketing department is getting results.
The point is that when clients outsource their marketing functions, they can negotiate the contracts with the vendors in such a way that targets and objective measures of performance can be drawn up so that there is a yardstick to measure the success of the outsourcing initiative. This means that MPO is not only qualitative in nature but its performance can also be quantified. This is indeed something that puts it at par with other outsourcing initiatives where objective measures are used to judge the performance of the vendors.
The Indian Connection
As mentioned above, MPO is becoming a popular outsourcing offering in India. But one area where Indian MPO differs from Indian BPO is that whereas the latter is mostly done for companies abroad and is an offshore phenomenon; Indian MPO is done mostly for clients in India. This is because unlike the BPO or the KPO, MPO needs the vendors to maintain personal contacts with the clients and the marketing agencies along with the media on a regular basis and hence, offshoring of such activities is not generally being considered. Of course, with the increasing use of teleconferencing and web conferencing tools, it is a matter of time before the Indian vendors in the MPO space decide to take up work on behalf of the foreign firms.
Downsides Exist, But MPO Future Looks Bright
Though the picture looks rosy, there are some downsides to the MPO as well. These include the need to maintain personal relationships with the media and marketing agencies by the clients which can only be outsourced to a point and not beyond. Furthermore, the time to get the MPO program up and running by the vendor can be lengthy due to the prolonged and protracted nature of the work. However, these downsides can be managed with some astute and agile strategies and overall, the outlook for the MPO sector looks bright and promising in the years to come.