Factoring in Economies of Scale

In today’s SearchInsider at MediaPost, an SEMer by the name of Steve Baldwin says:

Outsource where possible. … In flush times, marketing staffs tend to grow organically—like barnacles on the hull of a ship—but at the cost of efficiency and flexibility. For the past two years, SEM has been increasingly insourced for a range of reasons that might have made sense when times were good. Today, this trend is impossible to justify, except for businesses that are merely dabbling in search (which is never a good idea).

Clearly overstating—the only time you shouldn’t outsource SEM is when you are merely dabbling?—Baldwin still fails to provide a reason to cut SEM staffing.

I assume flexibility refers to the ability of outsiders to bring a much wider range of experiences to bear on a problem, since they’re not limited to those experiences your own company has had. That’s fine. But efficiency is not ipso facto a good thing, if effectiveness suffers as a result. What I mean is that SEM might very well be better executed by those who know your industry through and through, rather than by SEM generalists (such as search-marketing firms). This can be a killer if you’re in a B2B market and you outsource to a firm that, while expert in SEM, doesn’t know sh*t about terms and jargon used in your industry.

This is so true of marketing as a whole that it’s worth generalizing and restating: Find efficiency through economies of scale, sure: but only up to the point where the cost that comes from less focused and effective marketing becomes too great.

Right now, of course, we’re Decoupling, so such niceties can go out the window. But understanding where economies of scale help and where they don’t will get you to the Opportunism phase as soon as possible.