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11 Advantages & Disadvantages When Taking Your Advertising Inhouse

It can be difficult to know how much of your marketing and advertising should be carried out inhouse and how much you should outsource to an agency.

When making your decision you need to carefully consider the pros and cons of each – and how this might impact the performance of each advertising channel.

Essentially, businesses have three choices:

  1. Outsource everything to an external agency
  2. Bring everything inhouse; potentially establish your own internal agency division
  3. Utilise a mix of inhouse staff and agency specialists

Examples of larger companies that have decided to bring everything inhouse and establish their own internal agency include Coca Cola, Lego, Netflix and Amazon.

These companies have modelled their inhouse agency on the typical structure of a marketing agency – with the key difference being that these agencies have only one client.

As you might expect there are numerous advantages and disadvantages to this model. As an agency that helps businesses take vital digital services in-house, we feel we are best placed to offer a non-biased view on the matter.

So, let’s start with:

The Advantages

1. Cost

When you work with an agency, not only are you paying for their staff, but their overheads and a mark-up so they can make a profit.

This is not the case with an in-house agency, meaning that the cost of running in-house advertising is generally lower. The mark-up you’d pay to an agency can instead be invested into talent and advertising spend.

With that being said, it can be more difficult to manage inflating costs when running your own inhouse team; sometimes it is easier agreeing a set fee with an agency that is easier to forecast over time.

2. Productivity

Agency staff are often required to split their time across multiple clients and campaigns. While this helps with knowledge-sharing and experience, it can mean that your advertising campaigns don’t receive the proper care and attention you might like.

In contrast, managing a full team of inhouse staff with one client means that your entire workforce is dedicated and focused towards the same goal. This laser-targeted focus on a single cause can mean increased productivity.

3. Control

It can sometimes be difficult to exercise control over your marketing activities when these are spread across multiple agencies and departments.

Managing everything in-house means complete control over your advertising spend, marketing activities and strategy.

4. Communication

Agency teams are often positioned as ‘an extension of your own team’.

The reality can often be quite different – and despite working in a digital age of interconnectivity, it can be difficult to ensure efficient lines of communication.

An inhouse agency will likely work out of the same offices, with all the same lines of communication as exist within your business. This can make it easier to conduct internal meetings and prevent any potential breakdowns in communication that may lead to marketing issues.

5. Company Values

Hiring an inhouse marketing team means taking on a team of people who are fully embedded within the company – and who therefore understand company values, culture and philosophy.

Agency staff will also have a better understanding of your product and service than would be possible with an external consultant.

This will be reflected in the quality and performance of your marketing campaigns.

This should also make it easier to motivate your team, who will likely feel a better sense of dedication to the brand than if they were hired as an external agency.

6. No Conflict Of Interest

When you outsource work to an external agency, the agency may have existing relationships with one of your competitors (or they might establish new relationships without your knowing).

Usually agencies will utilise separate staff to prevent any cross-over, but it’s difficult to justify working with an agency where they may be a conflict of interest.

Taking your agency activities in-house can negate any conflicts and help to ensure that the team working on your account is fully dedicated to the end-cause.

7. Attracting Talent

It may be something of a generalisation but there is a trend of more experienced workers moving from agency to inhouse roles.

If you are a prestigious, well-recognised brand then you may find it a little easier to attract the best talent to your business.  This talent is also then owned within your business – rather than being rented temporarily.

However, before you give the green light to moving everything inhouse, you should first consider…

The Disadvantages

8. No Economies of Scale

Big agencies benefit from economies of scale, including lower costs for industry tools, advertising costs and business overheads.

These savings can sometimes mean that working with an agency is actually more cost-effective than taking the services inhouse.

9. HR Headaches

There are undoubtable HR headaches that come with hiring your own inhouse staff, including employee retention, shortage of talent and candidate screening. Not to mention that each employee will require resources for management, benefits and potentially agency fees!  When you work with an agency, this becomes their problem to deal with – which takes a real load off of your plate.

It’s definitely worth checking out the true cost of an employee (or employees) before making a decision either way.

10. No Shared Learning

Inhouse teams often work in-silo on your account. While this may have productivity benefits, it can result in tunnel vision and it’s easy for your teams to become insulated from industry developments.

In an agency environment there is nearly always a lot of shared learning – whether that be via industry updates or campaign case studies that are shared with the wider team. Successful campaigns are shared across business accounts, thereby benefitting everyone in the agency. This experience and knowledge is then utilised by the agency staff that work on your account.

If you do take your marketing activities inhouse, you need to make sure that learning and development is a continuous consideration for your agency team.

11.  Limited Skillsets

Even if you hire some of the best candidates in your industry, it’s unlikely you’re going to be able to match the wealth of skills, resources and experience available to a large advertising agency.  The advantage of an agency partner is in the sum of their parts – the range of disciplines they are able to bring together as a coherent service.

You should consider carefully what skills and experience you’re likely to miss by bringing one or more advertising channels in-house.

So…Which Do We Prefer?

Ultimately there is no one-size-fits-all solution. Both inhouse and agency solutions have both positives and negatives.  You should consider all variables before you make your decision – including costs, budgets, talent pool, HR implications and more.

If you’re still confused – speak to us about our inhousing consultation. We can help you decide which elements of your marketing you should look to inhouse and help you make the transition seamlessly.

Tom O'Rourke - Modo25
Author
Tom O'Rourke
Tom O'Rourke - Modo25
Author
Tom O'Rourke
 
  • Joe Friedlein
    October 31st, 2019 at 10:05 am

    A good read Tom and you raise some interesting points.

    I feel that you are (understandably) leaning in favour of the in-house model and can’t help myself (representing the more traditional agency model) from sharing some thoughts to counterbalance the advantages of going down the in-house route.

    1. Cost
    On paper, you are correct that an in-house team is cheaper. This is, however, based primarily on day rates. There is no debate that the cost per day for an employee will be lower than external / agency resource.

    What if you don’t actually need a full time team for your digital services? The cost argument becomes weak if you don’t actually need a full time resource as you can be much more efficient by outsourcing the work on a part time basis. This is obviously less relevant for the bigger organisations, but for the millions of smaller businesses, it can actually be far less expensive to outsource as you only pay for the time you need. Similarly, you are making a contribution to the overheads of part time agency resources rather than paying for everything.

    I was going to challenge you on the actual cost of recruiting and retaining an in-house team, but you address that in point 9 🙂

    2. Productivity
    Another interesting point. Actually, two points…

    The first issue, that of the agency not spending enough time on your campaigns, is easily fixed by managing the agency more effectively. If they are getting away with not doing what they should be doing on your campaigns, you should be identifying this and stamping it out. Actually, go and find an agency that is there to help you rather than fuel its own profits.

    The second point is that of ‘laser-targeted focus on a single cause’. In theory, I agree with you. In practice, I have seen (over and over again) that in-house teams get drawn into internal politics and other work that most definitely dents their focus and I would argue that being singularly responsible / accountable for the digital marketing campaigns (as per the external team model) can actually end up with more focus on those campaigns. In my humble experience, the bigger the organisation, the more time is wasted on pointless internal ‘stuff’ that can erode the focus on what you are supposed to be doing.

    Agency life is typically high paced and there is always a lot going on. What is the saying? “If you want something done, ask a busy person to do it”. I am not saying that in-house teams are not busy, but agency life is normally more hectic and I am not convinced that the productivity argument works in favour of in-house teams.

    3. Control
    A definite win for the in-house model on this one as it is definitely easier to manage budgets when it is not split in multiple areas.

    But does that mean you will actually see superior results? Easy does not always mean better.

    4. Communication
    Again, I would agree on paper with everything that you say. Again, I have question marks when I think back over my many years of working life.

    I am a massive believer in ‘pressing the flesh’ and there is no substitute to build effective working relationships. The flip side is that, in some organisations, a ridiculous amount of time is wasted in pointless meetings. I spent a year at a well know communications giant and we actually did have internal meetings to prepare for other internal meetings. In most of those meetings, people sat at a table staring at their laptop being frightfully important. Communication was terrible and email, usually to someone sitting next to you, was still the most common form of communication, which was typically then ignored.

    Calls / meetings with the agencies that we used were, however, much more focused and stuff got done. We were paying them for their time and we didn’t want to waste that time, so I personally found communication with the agency to be MUCH more effective than internal communication.

    Ironically, I often find that being physically apart can often help improve communication. As you say, we work in the digital age of interconnectivity and email / IM / Slack / etc. do enable an effective communication channel, when used properly.

    5. Company Values
    ***did you mean ‘In-house staff will also have a better understanding……’ rather than ‘Agency staff will also have a better understanding’?***

    Another theoretical win for the in-house model here. I absolutely agree that daily exposure, from the inside, will ensure that employees will have a greater understanding of company values, culture and philosophy.

    Why only a theoretical win? Being ‘fully embedded’ and a lack of variety can, and often does, lead to apathy and cynicism. It is easy to become blinkered and a corporate clone that doesn’t seek to improve the status quo. A massive sweeping generalisation, I know, and only true for some organisations but who has not worked with jaded in-house teams that have given up the fight exactly because they know their company culture and they know that their voice / opinions will not be heard.

    An external team will inject energy and enthusiasm, which is very likely to increase the quality and performance of digital marketing activities. Furthermore, the threat of being binned will motivate the external agency to deliver results. This is often not the case with far too comfortable in-house employees who are much harder to remove if not performing.

    This is an area where I think the Modo25 model works well as you offer a great balance of external energy / enthusiasm but embedding inside organisations helps you learn more about the culture of those organisations.

    6. Conflict of Interest
    Yet another interesting point. Again, I agree with what you are saying. As always, there is a flip side.

    This is actually something that we come across quite a bit when talking to potential clients. Some organisations will chose to work with an agency because they work with competitors, as they will have amassed a wealth of industry experience. Other organisations will prefer to go down the path that you suggest is better, where there is no conflict of interest.

    Ultimately, you need to choose between industry experience / knowledge share v. avoiding conflicts of interest (but missing out on valuable experience).

    6. Talent
    Recruitment in our industry is difficult. Finding the really good people is not easy.

    The real challenge, however, is retaining good talent. This is true for both agencies and in-house teams.

    I agree with you that a big / admired brand will find it easier to attract good talent but fundamentally disagree with the notion that this talent is then ‘owned’ within a business. To me, that sounds arrogant and, in my humble experience, loyalty to one’s employer is a rare commodity in our world these days. Another generalisation, but that lack of loyalty feels stronger to me in the client-side world than agency-side. Good people appear to get bored and move on more quickly and the promise of variety and the rapid pace of learning tips the scales in favour of agency life for many digital marketeers.

    I think it is a dangerous assumption that you will own the in-house team that you build. Digital marketing is incredibly nomadic and the team that you spend a fortune on may not be with you next year. My advice? Find a great agency and let them deal with those headaches.

    Sorry to have written such a long comment. It was a good article and you raise a lot of great points. You caught me first thing in the morning and you got me hook, line and sinker 🙂

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