In-housing was on everyone’s lips in 2019. The trend refers to businesses taking back control of their marketing, especially digital and turning it into a core aspect of daily operations.
Specifically, it refers to the conscious uncoupling between businesses and partner agencies which has started to become more prominent in the last couple of years.
In-housing has been a trend for quite a few years but became more of a movement rather recently. There are a number of reasons for that.
First and foremost the marketing mix looks very different than it was ten years ago. In the beginning of the previous decade most marketing budgets were going to offline channels, primarily TV and Radio. Digital was mostly an experimental part of the marketing plan. The place that the extra money, the leftover budget would be channelled.
In-housing refers to the conscious uncoupling between businesses and partner agencies which has started to become more prominent in the last couple of years.
For TV advertising to be booked businesses had to turn to agencies. A combination of the old-school booking system via the phone or contacts, plus economies of scale meant that booking TV directly with suppliers was not a viable option.
With the advent of digital this all changed. Paid Search ads and Social, even during the early days, were primarily self-serve booking solutions. They did not require any particular pooling of resources or personal connections. More importantly, Google and Facebook were immune to volume discounts. Over time display, the last bastion of the old school Insertion Order booking system, turned more and more accessible via platforms. Nowadays this has taken the form of programmatic and self serve display solutions.
By that point agencies were pushing more and more budgets into digital. Keen to make more revenue they often focused on short term returns whilst failing to realise that digitalisation of the marketing mix would eventually lead to the clients taking most of their advertising in-house.
Whilst this may initially look like a natural next step based on the above chronology and there are, in fact, a number of good reasons a brand would choose that route.
More control is one of them. Businesses are becoming increasingly digital. Not just the way they advertise but the way their whole operational structure works. Whilst back in the day most businesses were bricks and mortar based, now most startups are to a great part digital. Digital marketing therefore becomes a core function and as such businesses are less keen to outsource to external experts.
Speed. Agencies have notoriously long processes. From Request For Pich to brief structure, to then execution, this cycle could easily take 6 months. In today’s fast moving economic environment it’s hard to imagine this being a desirable timeframe. Add that to any commercial negotiations and you got yourself a year of back and forth without much actual work getting done. In the meantime, the clock is ticking.
Data. Data is the new oil arguably. Would you have someone other than yourself handling your valuables? It’s particularly tricky when you have been working with an agency and they have created your channel accounts. You probably don’t have direct access to them and most likely you have to rely on the reporting from your agency partner. Reporting tends to be weekly at best. In most cases access to data is not immediate or fast enough to enable decisions and reactive marketing. With Digital Marketing being the growth engine behind a lot of businesses, it’s not a surprise that they want to keep it on a tight leash.
Cost. This is very much dependent on a number of factors such as commission levels and agency pricing models as well as marketing mix but on occasion it can be cheaper to bring online marketing in-house. This holds particularly true for either very large or very small budgets.
This doesn’t however come without any challenges.
Reasons to not in-house
Lets not underestimate what a disruption in-housing can cause. It requires changing the structure of the core business to incorporate a whole new function. Most organisations struggle aligning all the other factions let alone digital marketing which tends to move at lightning speed. That aside there are more reasons as to why not everyone is in favour of in-housing.
Training. Agencies, really, have been great at doing one thing: providing a stimulating environment for a young workforce who is eager to learn. Truth be told this is very hard to replicate in-house. In agencies each person has the opportunity to be exposed to multiple accounts and clients during their tenure. More importantly they are able to rub shoulders with some of the brightest and most forward thinking brains in advertising. If any problem occurs there is always someone with more / better experience ready to lend a hand.
Costs. This is where it gets very interesting. According to a few in-housing proponents it can be cheaper to not rely on external partners. As stated above this depends on a number of factors, but the effect of in-housing on cost is direct. The immediate marketing cost decreases but the commission cost gets transferred to salary overheads. Depending on the structure of your organization’s finance this would sit within two different contribution margins and most likely pots of money. Either way, even with a lowly 10% commission you would have to be spending quite a lot on marketing to justify the average salary cost of a marketing manager client side plus overheads such as insurance.
Most organisations struggle aligning all the other factions let alone digital marketing which tends to move at lightning speed.
Hiring. Notoriously difficult to do for digital marketing resource as it is a particularly competitive field. More importantly, it takes a lot of work to make a company attractive enough from an identity and values point of view. It tends to be easier for established companies as they carry prestige but startups can find themselves between a rock and a hard place. On the one hand, they often don’t have the money to pay above market rate in order to attract the best talent. On the other hand, they don’t have the brand equity to attract talent on reputation alone. Having a strong set of values or giving out equity can go a long way.
Flexibility. Key for smaller businesses and startups alike. Often, when companies are just starting out they don’t know which channels will work and which won’t. As a result it’s often better to use a partner that can help flex between channels and approaches. Hiring for the wrong skill set can create problems in the long term so it’s better avoided.
Ways to work around the dilemma
Is it completely black and white then? As it turns out, no. With the rise of in-housing and the increase in gig economy it has become easier to find the right resource quite flexibly.
Freelancer platforms and marketplaces such as Fiverr and Upwork are a good way of finding resources for low ticket one-off marketing tasks. A quick logo or a small redesign of a non business critical part of the website can be easily ordered through one of these solutions.
Of course, there are pitfalls. These platforms encourage competition between the freelances thus making sure that you can find one of the cheapest avenues to your deliverable. Cheaper does not mean best. They also levy hefty fees making most attractive to the lower ends of the market.
When it comes to quality however its much less straightforward. By nature these platforms have quite a lot of attrition. In essence, the race to the bottom when it comes to pricing does drive some of the best freelancers away. High cost of living in some areas cannot be balanced out by volume and naturally the best churn out.
The other key thing to bear in mind is that freelancers are not vetted and reviews aside, it can be very hard to filter for quality.
In order to address these limitations a new operating model has emerged. The Service as a Product type platform. Part human part tech this model is combining the best aspects of working with an agency partner and the benefits of having an in-sourced team.
At Adadot we provide flexibility without compromise, quality without barriers.
We provide bespoke marketing teams that become an extension of each in-house team. Our marketers are experienced and have spent years growing similar businesses. They are vetted, and prequalified but they also benefit from the support of a community of like minded individuals.
A new operating model has emerged. The Service as a Product type platform. Part human part tech this model is combining the best aspects of working with an agency partner and the benefits of having an in-sourced team. Its the very idea on which Adadot.com is based.
Here is how it works.
We have a simple yet effective mechanism to capture your requirements. Once these have been defined our algorithm identifies the ideal team for you. Your project gets set upon our platform and you can then access your dashboard with results as well as manage your team. Our experts work with you directly just like being part of your direct team.
In conclusion, whether you should in-house or not depends on your particular situation and there is no one size fits all. Should you decide to in-house you need to ensure that your team is supported with the right flexible resource and training.