Clients wondering what has happened to the savings and performance boost from in-housing need to develop flexible, hybrid models, says James Briscoe, Strategic Advisor, and Investor at Percept
In-housing has been the buzz phrase of the past couple of years but as disappointment mounts over a lack of cost savings and a drop in performance, there will almost certainly be a shift to right-housing.
Companies that in-house too much, too soon are finding they break their marketing effort. Now, the focus is moving on taking a more considered, cautious approach to in-housing and only taking control of capabilities that make sense and which the business can properly operate. For the rest, an in-house team needs to manage a relationship with gifted experts at an agency.
The background to this growing trend to right-house lies in an inconvenient truth surrounding in-housing. First of all, it has rarely involved a brand taking their entire data, customer relationship management (CRM), media, creative, and strategic digital marketing function in-house. In fact, WARC research shows just 15% of businesses are prioritising creating in-house agencies to self-serve their digital marketing needs.
Perhaps more alarmingly, figures from the Data and Marketing Association (DMA) show that for those companies which do in-house some function, there is a gap between what they expected, and what is delivered. Nearly half thought they would be more productive but just under a third found this to be the case. Additionally, 38% thought they would get a creative boost but only 27% reported one.
Insight, not hype
Closing this performance gap requires brands to seek expert advice on how to build a strategy to in-house the capabilities that make sense for them, and to keep agency relationships in a place where it is to their advantage.
The first priority for any senior marketer should be to get visibility over their data and how it is used to gather insights to drive campaigns as well as to discern the impact of this marketing activity.
Once they understand the process, and where their budget is going, many companies will start, and possibly end, the in-housing process with data. This is not just because it makes sense to have instant access to their own data, it mitigates the risk of it being lost or misappropriated by a third party, landing the controller in hot water over GDPR.
In-housing data nearly always makes sense, as can owning and in-housing the CRM, data, marketing, and analytics platforms campaigns are run through and measured by. It is the next step where expectations can be raised too high before being dashed by the in-housing performance gap.
Who will run it?
The simple first step to avoid falling into a performance gap trap that many now find themselves in is for a business to ask itself what talent is required to both operate the technology and set up winning campaigns.
It is at this moment companies need to take a huge step back and realise they are in competition with every tech giant and every swanky agency for the best people. They are going to struggle to get the best people. However, brands should think about what else they can offer, such as a sense of purpose or exposure to different experiences and training.
This becomes exacerbated if a business decides it is paying too much for its advertising media and opts to bring that in-house too. The thing is, media planning and buying is a highly skilled job which they will find very difficult to do and, of course, without an agency they will not be receiving discounted media or shared data insights from a central trading desk.
There is also the very real question of what they are getting for their money. A business that takes media buying in-house has no idea what they should be paying for advertising space and what a successful campaign looks like. That is why they should always have the process audited. In fact, even if they retain a media agency, a media audit is essential to see if the agency is performing well.
It's not just about saving money
At some point, businesses have to realise that in-housing may not save any money. The technology to bring data in-house and then the marketing platforms to utilise it can be expensive and so too is attracting, training and retaining the required staff. An agency can spread these huge costs across many clients, a business will only have itself.
This is why we are going to see the rise of right-housing. Instead of businesses expecting they can do everything themselves, and save money, they need to shift focus to what works for them, which makes sense.
Data will nearly always be better in-housed where there is more control of it. After that, brands will need to make some judgment calls on whether an agency has the best tools and the best people to run campaigns. If a business buys those tools for itself, it might go for a hybrid model where it owns the data and the platforms, but the expertise comes through an agency. Maybe they can take care of some content themselves with the big idea, the big branding campaign being created and executed by an agency with access to talent that will never swap a plush office for a trading estate in the suburbs.
These are all questions experts can help a business make decisions on and the answers will vary greatly from one client to another. What is for certain, though, is that the dream of taking everything in-house soon turns into an expensive nightmare.
Stepping back and taking stock of what a business needs to take control of, and what it is equipped to do for itself, will identify the areas where experts are needed to span what will otherwise soon turn into a performance gap too many clients have sadly fallen into.