Upshoring

‘Upshoring’ (offshoring but getting an upgrade in quality or value) marketing services to the UK is becoming more and more popular since the pandemic and a generally wider acceptance of remote working.

In a recent poll of US chief marketing officers on LinkedIn, we sought to establish just how many marketing leaders in the US were already using UK agencies or had plans to do so. We also looked at whether they were aware that the equivalent services from a UK marketing, digital and PR agency costs between 40% and 60% less than in many regions of the US market.

The results were remarkable, with 41% of respondents open to or already ‘upshoring’ aspects of their marketing needs to UK agencies; a further 15% open to persuasion; and a minority stating that only a US based team would be considered.

Many US marketers and CMOs ask why and how, can UK agencies charge so much lower rates than equivalent US ad, PR, design and digital marketing agencies? Is it because the quality is lower or the work is done by more junior people? Is it due to the exchange rate and the effects of Brexit on the British economy?

Well, the answer involves many factors.

The UK has seen a significant drop in the value of the pound in recent years, from an average of $1.8 USD in the decade before 2016 to $1.25 since then, and that in itself represents a relative reduction in UK prices to US buyers of 25%. The cost of living in the UK is lower and average UK wages are also significantly lower, at £34,900 in 2023 ($44,300) compared to $74,738 in the US, a massive 40% less.
But how can lower wages be possible? Well, the National Health Service is a factor, effectively providing healthcare for all, think universal $0 copay Medicare. This allows employers and workers to make different decisions about work, while always having the peace of mind of the same level of healthcare, regardless of their employment status.

It’s also worth bearing in mind that the cost of living in the capital, where many US visitors stay, is much higher than many other parts of the UK. This is especially true of the creative centers of Leeds, Manchester, Bristol and Scottish cities such as Glasgow and Edinburgh where some of the UK’s best agencies can be found, with much lower rates.

Education is also a big factor, especially for workers in their 20s and 30s. In the US, where a four-year degree can cost as much as a new Bentley, many grads must choose roles that will service the huge debt that student loans bring. In the UK, however, university fees are capped at around $11,000 per year for a degree that takes just three years to achieve, meaning it’s more like the cost of a used Audi. These loans are also Government backed, can only be recouped as a small proportion of your take home pay, and are forgiven automatically after 30 years.

These factors all mean that workers need less income and are under less pressure to earn, and so they are far more likely to do the jobs they want to (marketing is one the most popular professions) and they stay in the field for longer. They take the leap to entrepreneurship more easily too, as the cost to set up is lower, and the ‘safety net’ of social security (income support) and free healthcare is far more generous.

The end result is that the UK has some of the best creative talent in the world, working for agencies in all fields of marketing at very much lower rates than the US. They also bring a new perspective on marketing and creative challenges, and most have experience working across Europe by the open nature of the EU over recent decades. Some agencies, especially the ones GBM works with, have credentials and experience of working with US clients previously, and have staff who have lived and worked in the US and already get the differences between the States and other parts of the world.

Others may need more guidance in these cultural and geographic differences, and that’s a big factor in some B2C work for the US market that makes it crucial to identify the agencies with the best track record and exposure to US consumer marketing.
So, for US marketing leaders and CMOs, it really can be the case that ‘upshoring’ marketing services to the UK can deliver real savings, higher quality work and a more experienced team, with better ROI for marketing budgets.

All these benefits come without the downsides of offshoring to regions further away – there’s no (significant) language barrier or a massive time difference, with the east coast of the US and the UK just five hours apart for most of the year, so morning meetings in the States are afternoons in the UK, and that ensures great communication and flexibility of meetings.

These are some of the main reasons an increasing number of US business and brands are turning to UK agencies and ‘upshoring’ some aspects of their design, branding, creative, PR and traditional and digital marketing services.