To in-house or not to in-house is the question on a lot of advertising and marketing leader’s minds. Many companies have great experiences with their ad agencies, but for those who don’t or are under pressure from leadership to generate results and optimize budget, it’s something they may consider. It’s not an easy decision to make and can mean overhauling whole teams to make it happen, so it’s worth weighing up the pros and cons before making the jump.
In advertising and marketing, there are different operational structures for how teams are organized. They’re usually split into three categories:
- In-housing: Is where all advertising activities that are dealt with by the company’s in-house team
- Outsourcing: Hiring an agency to do your advertising activities for you
- Hybrid: Activities are split between the in-house team and agency partner
For more details on this, check out our free guide to in-house marketing and advertising.
Studies show that a lot of companies are deciding to move advertising operations in-house, and shifting away from agencies. We’re also seeing more companies create their own in-house advertising agencies.
What is an In-House Ad Agency?
The in-house advertising agency is built up of the components of a traditional agency, but is hosted in-house and owned by the parent company, with the parent company as the only client. Examples of companies with in-house ad agencies are Netflix, Coca Cola, and Lego.
While we’ve seen a move to in-housing and in-house ad agencies, we’ve also seen companies who have switched, to realize its not for them and go back to hybrid and outsourcing. In-housing isn’t for every company. It can be a huge leap, and take more energy, time and cost more money than a lot of organizations realize before embarking on the journey.
In this blog we’ll cover the advantages and disadvantages of moving advertising operations in-house.
Advantages of In-House Advertising
We will first look at five benefits of moving advertising operations in-house:
1. Improved brand connection: In-house teams are more likely to be culturally invested in the brand and the brand’s success. This is not a one-off project but an ongoing process that will affect the mid-term and long-term. Agencies may lack personal and cultural investment.
2. More transparency, greater control over creativity: In-housing allows marketing teams to gain more clarity over the decisions you make while allowing your teams to become more agile and digitally focused. 56% of marketers admitted that their team’s creativity increased due to in-housing. You also get more control of your data to help you make better-informed decisions.
3. Cost savings and better ROI: In-house teams also deliver cost benefits, as they have more time to work on an activity and are already on budget at the company. Agencies may have flat day rates or project fees, and the time an in-house team can put into a project is generally higher than an agency team. However, in-house projects must be flexible and ready to adapt to change to be cost-efficient. Additionally, 63% of marketers have seen a positive change in ROI since taking on in-housing.
4. Control of data and Intellectual Property: IP can be a crucial reason businesses decide to build an in-house team. That way, all key learnings and knowledge is retained within the company, allowing for continuity and growth in future campaigns without worrying about third parties.
5. Speed and integration: If we’ve learned anything from the pandemic, it can be really frustrating to have a marathon of online calls with external stakeholders, clients and agencies to discuss even the most basic of processes before having to check schedules and plan any feedback. It can be hard for agencies to overcome silos and liaise with company stakeholders efficiently. With in-housing, things (should) happen when you want them to, and since everyone is on the same page, the smoother collaboration will make things work out faster. Teams are also better-positioned to communicate and create rapport with stakeholders, reach common objectives, and escalate issues.
Disadvantages of In-House Advertising
In-housing also has its obstacles. Here are the five challenges that come with in-housing:
1. Cost of Technology: Agencies tend to have access to more industry-leading tools. Technology isn’t always cheap, but it can make a significant difference between success and failure. Drafting contracts for pieces of technology can be expensive, and these expenses can determine whether or not your company carries out an activity efficiently. On the other hand, agencies invest in these technologies and carry the cost across a broad client base, making these purchases more affordable. CMOs must be prepared to liaise with CTOs and spend similar amounts, given the likelihood that technology and advertising will increasingly work hand-in-hand.
2. Staffing: Technology is essential, but not if it isn’t used correctly and by the right people. Advertising teams face numerous challenges that require a wide array of expertise. Agencies have several experts across multiple projects. You need to make sure you have adequate staff to meet your objectives. To do this, you must identify the resources you need and the level of expertise required. In agile marketing teams, you must also know how much time they’ll dedicate to key roles and what they’ll spend the rest of their time doing. Finding the right staff has its challenges – ask any hiring manager. As remote work opens the pool to fish for talent globally, agencies and businesses must compete to attract the best talent. Guaranteeing career development, retaining staff to gain an ROI, finding the right talent outside localized digital hubs, and spending on training if needed are hurdles that marketing and advertising leaders must overcome.
3. Lack of Experience and Resources: Agencies come with experience in the field and with different kinds of companies, many of them similar to yours, so they probably know how to create a strategy that suits you. This wealth of experience and resources means they have a tried and tested approach to carry out tasks swiftly. That is if they manage to overcome communication obstacles with stakeholders.
4. Perspective: It’s easy to be blinded by subjectivity. What’s worse, people are easily bogged down by old vices, opinions and narrow-minded thought processes that lead to innovation. In-house ad teams run the risk of being so used to old habits that they struggle to think outside the box. Getting input from teams who have a fresh point of view and work with an array of clients can help identify ideas or strategies that your team might not have otherwise thought of. Agencies force themselves to keep up-to-date with new trends to maintain a competitive edge. In-house advertising teams must do the same to avoid being left behind.
5. Guaranteeing High Performance: Agencies may have experience carrying out similar projects, but that doesn’t mean they always get things right. But, even then, the solution is clear: you can change to another agency. However, if your team isn’t delivering the right results, time is lost, and you can’t replace the whole staff, especially if it is for embarking on a project that in-house teams weren’t prepared for in the first place. Rectifying errors with your in-house advertising team is worthwhile because it is an efficient way to learn, but it can be slow, it can be costly, and the path to success is not always smooth.
Deciding between moving advertising in-house or not, is a big change that is individual to each company and team. If you do decide to make the move, we recommend doing it slowly, role by role, to get a taste for how it would work or if your performance is better sticking with your ad agency.
Alternatively, if you’ve read these pros and cons and aren’t confident you want to move everything in-house, but aren’t happy with the visibility you get from your agency partners, adopt a platform like Mediatool where you can see and collaborate on campaigns with your agencies. Giving you more control, without overhauling your team and dealing with the negative aspects of in-housing.