It’s the time of year when most of us reflect on the year that was, in hopes of finding that business-altering insight to guide our companies through the fiscal year to come. For brand marketers, the 2019 version of a new year resolution seems to be “In-housing my agency’s services.”
It feels like every week there is a new industry article on the next brand that has decided to take all (or some) of their advertising in-house. In fact, according to the In-House Agency Forum (IHAF) and Forester Research, which co-fielded a 2018 study “State of In-House Agencies”, 64% of corporate American brands have in-house agencies. This figure is up from 42% just a decade ago. The reasoning behind moving digital media “in-house” includes a need for a brand safe supply chain, cost transparency, improved efficiency, better creative, data control and to spur growth for the business.
However, we are also starting to get a glimpse into results from brands that have been operating digital media in-house. Many are painting a picture of hiring challenges, internal disruption, C-suite misalignment and, in some cases, failure. One very recent example is Intel’s Agency Inside, AdAge’s 2017 In-House Agency of the year. The brand just announced layoffs and a restructuring of Agency Inside as their newly installed CMO re-focuses the brand’s message and target audience, essentially diverting away from what Agency Inside was built to accomplish.
If you’re thinking about bringing digital advertising in-house, below are four questions to consider.
1. Is executive leadership aligned with your vision to go “in-house”? If the answer here is anything but a resounding “yes”, stop everything.
Intel, Verizon and Unilever have all expressed publicly this year that bringing a digital marketing apparatus in-house after having previously contracting an ad agency for such services was a very disruptive and difficult process…with mixed results. Ad agencies are built to serve the demands of brands. Brands are not built to service themselves. It’s new territory and while the theory of savings and control are intoxicating, executing the plan takes commitment throughout the organization.
Before anything else, you, a marketing leader, need to know that the rest of the C-suite is on board for a multi-year investment of cash and patience as you build, test, fail, and succeed with your vision. It can and has been done successfully, but executive leadership should be aligned with your plans and key performance indicators. If not, the foundation of this new team will always be on shaky ground.
2. Do you want to “in-house” everything or mostly everything? – Brands like Netflix, Verizon and Bayer AG made the decision to go all-in, investing significant capital on recruiting, hiring, training and software to own and operate each stage of the workflow and output of marketing.
Most large and mid-market brands take a hybrid approach, including eos, Body Armor, Duracell, Target, Adidas, Marriott and Vodafone. Some want to own the ad tech contracts/relationships. Others offload Programmatic and Social strategy, buying and analytics to focus on brand strategy, creative, content creation and data curation. A few keep traditional TV and Print buying with their ad agencies for their up-front buying power, while moving social and programmatic buying to more efficient and experienced third parties. Search oversight and execution tends to come in-house, especially for mid-market, direct response-focused brands.
There is no one-size-fits-all approach that produces success with in-housing. You may need to test and learn to find the right workflow and design that generates optimal output with the least amount of internal disruption for your organization.
3. Can you secure (and keep happy) the talent you need to be successful? – This is an important yet often overlooked aspect of the “in-house” movement. Finding and ultimately hiring multi-disciplined digital media talent is very difficult in today’s marketplace, especially if your brand is headquartered outside of a major media market. For example, it’s one thing to hire a former agency trader to be a hands-on-keyboard buyer, but finding someone who understands advertising and marketing and can properly interpret analytical data who ALSO doesn’t mind pulling the levers and flicking switches That is very difficult to find. Then there is the cost of that individual’s talents that need to be considered, as market value for such experience only rises in this tightening job market.
Being open to hiring people outside of your market – or even your state – and letting them work remotely will improve your hiring success rate. Once you do find the talent and make the hire, the task then shifts to keeping that employee happy, challenged, and bought into your company’s culture.
If your organization has made the decision to invest in hiring a full digital media staff, be prepared for a potentially long journey of recruitment and sticker shock. Being flexible and open while creating a strong and positive work culture will increase your “in-house” success rate.
4. Are you ready to accept the risk? – A positive benefit of having an ad agency or specialty execution partner for digital media is that if something goes wrong, there is someone to blame. Going in-house means any and all errors are yours and yours alone. The most public are social media snafus, but unpublicized errors could be just as costly. For example, be careful your employee does not put an extra zero on the end of that $100,000 programmatic budget line in the DSP. That could be a $900,000 mistake!
Need a real example to be convinced? Just this month Google admitted a major ad buying mistake that will cost them an estimated $10MM, after their “Night of the Yellow Ad” campaign, which served 300×250 ads on dozens of publishers in error. The campaign ran up an unplanned tab of $1.6MM per hour. Yikes! This mistake was made while Google was training customers on best practices using their buying platform. The risk is real.
The new year will produce more brands that take digital media in-house. Success in this endeavor can be accomplished by brands, big and small, with the right leadership, internal design, talent and risk tolerance. Happy Holidays, and here’s to a more profitable and successful new year!
Author: Sean Sweeney, Vice President of Client Development @ Coegi