Digital Marketing Outsourcing Relationships Between SMEs and Service Providers: An Agency Theory Perspective

Digital marketing has become a necessity for small to medium enterprises (SME), exacerbated by the pandemic. Given the sometimes-limited knowledge and resources for digital marketing, SMEs often outsource digital marketing to service providers. A review of B2B literature demonstrates a predominant focus on how businesses internally adopt and use digital marketing with limited insight as to how digital marketing has been outsourced nor the subsequent relationship between client and service provider. This is a gap in scholarly and practitioner knowledge with increasing disputes in the SME and digital marketing service provider (DMSP) relationship. To address this gap the current research, informed by agency theory, adopts an exploratory research design utilising interviews with both SME owners ( n = 13) and DMSPs ( n = 7). Results uncover the importance of considering relationship expectations, transparency and organisational compatibility and how they relate to goal conflict or convergence in the SME and DMSP relationship.