Weighing The Options: In-House vs. Outsourced Marketing
Should you outsource your marketing, or hire a team to do it in-house? This has been a longstanding debate for years.
The solution boils down to what the right fit is for your company. Essentially, businesses are faced with three choices:
Establish an in-house agency
Outsource marketing to an external agency
Utilize a mix of in-house employees and agency specialists
In recent years, there has been an ongoing migration of marketing functions from an agency to in-house. Some companies are even experimenting with a blend of in-house and outsourcing — choosing to keep projects with quick turnarounds in-house and outsource bigger, more complex campaigns.
On one hand, agencies leverage partnerships, vendors, and broad networks of connections. They also guarantee on-time delivery and are generally experts in their field. But on the other hand, in-house agencies’ passion and brand knowledge is unmatched by external ones, and they have the flexibility to move at a pace that suits their needs. Yogurt maker Chobani, who does 98% of its marketing in-house, has found success in bringing its creative, sales leadership, and new product development all under one roof.
We’re discussing why many brands are moving their marketing functions in-house, as well as comparing in-house, outsourcing, and the hybrid model.
The Growing Trend Of In-House Agencies
In Gartner’s 2019 Marketing Operational Survey, 63% of respondents shifted some work from external agencies to internal marketing services in the last 12 months.
When asked about their views of making this in-house move, marketers’ top answer was cost savings. In fact, Inner Circle, JP Morgan Chase’s in-house agency has saved the company $20 million in marketing costs since it was established in 2015. In addition, Secret of Procter & Gamble now has its own agency, which creates and produces ads “for a tenth of the cost and in one month versus five,” according to P&G chief brand officer Marc Pritchard.
Many other businesses, like Clorox, Anheuser-Busch, and Verizon, have built in-house marketing teams as well. PepsiCo is in the process of recruiting roles in the fields of CRM, digital, data management, shopper marketing and ad-tech. Other major CPG marketers like P&G and Unilever are similarly exploring ways to exert greater control over digital media.
Does this mean ad agencies will go completely extinct? Not likely. Given ad agencies’ entrepreneurial nature and constant ability to reinvent themselves, ad agencies boast many pros that we will touch on later.
Option #1: The In-House Model
Enticed by the prospect of working with one brand or one product, many creatives have opted to work on in-house teams. An in-house agency functions just like a traditional advertising agency but typically only serves one client: its mother company.
HERE ARE SOME PROS THAT COME WITH AN IN-HOUSE MARKETING TEAM:
Increased Control: Managing an in-house team gives you complete control over your advertising spend, marketing activities, and strategy.
Cultural Alignment: In-house employees tend to have a deeper understanding of the product, core values, philosophy, and internal processes of a company. No matter how involved an outside agency is, they are never able to intuitively understand a brand at the same level as the brand's employees do.
Increased Communication: Communication typically happens quicker in-house — which leads to increased flexibility and speed on projects. Companies are also better able to quickly shift priorities and address business-critical projects or needs at a moment's notice, whereas a scheduled meeting is typically required to communicate changes to an outsourced agency.
Passion and Dedication: Apple became great under Steve Jobs because he ruthlessly controlled every aspect of the brand, and in turn, his employee performance was fueled by his passion for Apple. Part of having a team working for you full-time means they will be completely committed to the marketing needs of your organization. Internal employees grow a sense of passion when they work for solely one client, and that tends to drive higher levels of dedication to the company’s success.
HERE ARE SOME CONS THAT COME WITH AN IN-HOUSE MARKETING TEAM:
Lengthy On-Boarding Process: The processes of advertising a role, interviewing candidates, and hiring the most qualified ones takes time and resources.
Cost of Job Accommodations: The extra office space, remote accommodations, overhead of salaries, and equipment it takes to maintain a staff in-house can be quite costly. Not to mention, vacation days, benefits, and other incentives can quickly pile on costs for a company.
Volume of Work: When building an in-house marketing team, it’s important to ensure your team is equipped to handle the volume of incoming requests. If your company is small, keeping your marketing in-house may leave less time for other key business activities. You’ll want to ensure your in-house employees have enough bandwidth, or they could be stretched too thin.
Underdeveloped Skills: Lack of talent and skills are some of biggest drawbacks of the in-house agency model. Continuing skills education and staying up-to-date on the latest trends and technologies — and even having access to them — is generally a challenge for in-house teams.
Option #2: tHE Agency MODEL
Essentially, outsourcing is subcontracting a process like manufacturing, accounting, or consulting to a third-party company. In terms of marketing and advertising, you can outsource an agency for many services — including SEO, social media, graphic design, media buying, public relations, copywriting, and more.
At some point, many companies — especially growing ones — outgrow their internal marketing resources. Struggling to keep up with marketing campaigns and not achieving their desired results, they seek external help from agencies. Agencies have the capacity to encourage niche knowledge, which is something that in-house teams don’t always have the resources to do.
If you outsource an agency, you should give them appropriate access to your culture and business resources. The longer you work with an agency, the more they’ll begin to understand your brand, culture, and message.
HERE ARE SOME PROS OF OUTSOURCING YOUR MARKETING FUNCTIONS:
Allows You to Focus On Core Business Responsibilities: Hiring an agency frees time you would’ve spent recruiting employees to fill the ever-expanding list of digital marketing roles. If you’re working with a limited number of staff members, you can pass on projects to freelancers and external agencies to help lighten your internal workload.
Access to Advanced Tools: Agencies generally have access to the latest marketing tools, technologies, and software that smaller in-house teams may not be able to afford. Bigger agencies often benefit from lower costs for industry tools.
More Expertise: Let’s say your business isn’t ranking well for SEO. Many agencies have dedicated SEO specialists that know search engines inside and out. Companies that outsource their marketing functions are able to benefit from the niche skills of experts in certain fields, who often work at agencies.
Outside Perspectives: Agencies are often working on several different marketing campaigns for dozens, even hundreds of accounts. Chances are, they may even have a client in the same industry as you that operates very similarly. Because of this, they bring a fresh, outside perspective that often leads to success for your business.
HERE ARE SOME CONS OF OUTSOURCING YOUR MARKETING FUNCTIONS:
Longer Learning Curve: An agency needs to be brought up to speed with your company’s workflows, approval processes, and culture. You also need to guide them on how to manage sensitive company data, files, or any other internal information they may need to perform their jobs.
Not Always Being Priority: Agency staff have to split up their time across multiple clients and campaigns. This means you may have to wait days, or even weeks, for a small deliverable that an in-house marketer could complete in one hour.
Conflicts of Interest: When you outsource work to an agency, they may already have an existing relationship with one of your competitors. In addition, agencies could have ulterior motives. For example, they may focus on the awards they could win for a campaign rather than the ROI it might generate for your company.
Less Control: As you can imagine, you lose some control over how tasks are monitored and executed when you outsource your marketing. However, this shouldn’t be an issue if you have hired a reputable agency.
Option #3: The Hybrid Model
As of only recently, brands are starting to realize they can have the best of both worlds with their marketing — by using a combination of the in-house and external agency models.
The hybrid model promotes client-agency collaboration by embedding agency expertise alongside a company’s core team. With agency talent working side-by-side a company’s marketers, the agency team is better able to deliver more authentic brand stories and creative campaigns. Most in-house teams aren’t seeking to compete with agencies — so combining their talents can ultimately be a very sensible approach.
Does the hybrid model mean agencies lose control? Not at all. In fact, many forward-thinking agencies can embrace this blended marketing approach by evolving their services to act as “in-housing consultants” for brands making the move. Agencies should view the hybrid model as an evolution of the industry landscape, rather than an existential threat to their operations.
HAVE THE BEST OF BOTH WORLDS:
Shared Capabilities: The hybrid model supports shared responsibilities, accountability, technology, and incentive to collaborate between employees and outsourced creatives. With a hybrid model, the internal team typically develops a brand strategy and the agency team translates that into a communications strategy.
Saves the Brand Money: The hybrid model eliminates the cost of maintaining an in-house production unit, yet still allows for deep brand knowledge and consistency.
Brands Have Some Control: Through this partnership, the brand still leverages some control — all the while gaining access to agency expertise, up-to-date technologies, and ongoing support to ensure a project stays on track
Access to Experts: When a company needs it, an agency can bring in well-versed creatives and niche specialists to work on the hybrid team. For example, if a company were working on an important video project, the agency may bring expert directors and videographers to work on it — and then send them off elsewhere until they are needed again.
For marketers that struggle with taking their advertising, public relations, and marketing entirely within their four walls, a hybrid approach to marketing is an ideal solution. Brands like Mazda, Adidas, Airbnb, and Heineken have opted to take a hybrid approach to executing their marketing functions.
So, Which Model Is Correct?
Are you not seeing results from your internal team, or is your marketing team overworked? Consider outsourcing your work to an agency. But if your marketing team is already converting a lot of leads, then opt to keep your marketing in-house.
Ultimately, there is no one-size-fits-all solution. Both in-house and external agency teams bring their pros and cons, so it’s important to consider how all these variables will factor into your business. And remember — you can always switch around until you find the model that suits you best.