More and more brands are taking their marketing in house.
Want proof? According to the 2017 report from RSW, nearly 80% of agencies predict their clients will move some marketing services in house in 2017
As somebody who is the CEO of a marketing agency… good!
More brands are paying attention to what agencies are doing. More brands are educating themselves on what’s going on in our industry. This highly encouraging to me and what we believe in as a company.
What’s the actually fall out here? What does that mean for brands and your company?
This trend is happening for good reason. For years, agencies have been getting too fat on their brand fees due to a lack of transparency on the work they’re actually doing. We’ve written about this extensively in our badvertising posts.
Brands can look at account history, but most in house teams don't, and some agencies have programs that automatically change bids back and forth to make it look like they’re working when they actually aren’t.
What a time to be alive.
Billing for hours is also archaic, as nobody's sitting there on a screen share watching their agency do work. That would be a dystopian 1984 version of what marketing agencies could be, and nobody does that.
This lack of transparency is one of the main reasons why companies are making the shift to in house. Even if executives are not watching their employees’ screens, at least they have a general idea of what they are paying for.
Is your marketing agency giving you account ownership and access? Are their reporting practices transparent? You might want to take The Badvertising Quiz to make sure you’re not being screwed over.
Let’s say that as a marketing executive, you have pulled the trigger on moving digital marketing in house. Here’s what that means immediately.
If you’re transitioning from agency to in house, the first thing you have to hire people to do the work the agency was doing. After working with several companies that have gone through this process, we know that finding and hiring good people is the hardest part of transitioning to in house.
Metric’s approach to hiring account managers revolves around key factors like adaptability, curiosity, restlessness, and being results oriented. Read more about that in our post about finding the perfect marketer for your team.
Another challenge is, companies will inherently lose perspective that an agency has by going in house by virtue of an agency having more than one account to look at. Those learnings are invaluable and impossible to replicate by a typical marketing department.
One trend for companies is to use consultants to check in on the new marketing team, training and providing vertical insights. This is a useful middle ground we’ve seen with many of our clients, and have often serves as the consultants for brands ourselves.
As a brand, you have to think of it in terms of opportunity cost of you and your team’s time working on other things to help grow the business.
If you’re the vice president of marketing, and you paid ten people the amount that you could get five people to do for the same cost somewhere else, what is that worth to you?
Certainly there's a time element of having to manage ten people versus outsourcing five through an agency. If you hire an agency of experts, part of the reason they’re experts is that they can get more done with less time.
On the flip side, if you hire lesser experienced people for cheaper, in theory, you get more output, but the quality won’t be as good.
Something that’s largely not talked about (but we see a lot) is that geography comes into play. Smaller market cities won’t attract the caliber of talent as major market ones or at least have access to as much talent. Companies taking their marketing in house should keep that in mind.
Ultimately, making the shift from an external marketing services provider to building your own team will require a serious reality check. Think carefully about where your company sits among your competition.
Next, let’s talk about budgets. Clearly, most brands take their digital marketing in house to save money, and we have even seen some pretty exorbitant fees is from agencies where the work wasn't even that good. And so, many brands could cut those fees in half, go in house and they would probably make more money without suffering lower quality.
From a price perspective, it reminds me of something my old boss used to say:
Price is what you pay, value is what you get.
Just because something is cheaper doesn't mean it's better or worse. At some point, we always decide to pay for something because the value is there. That should drive the decision.
Brands have historically viewed marketing as a cost center and now performance marketing has shifted it to a revenue driver.
The final impact on the organization relates to data. If your company worked with a good agency, they should have access to their data. Ideally that wouldn't change with an in house transition.
But what would probably shift is how a brand would make decisions. Hopefully your new in house team knows what to do with that data. There is the very high level visualization, which can help inform business decisions. You also need to translate that information for strategic purposes at every level. From executives to investors to the digital marketing team, everyone should using the data differently to help them form their decisions.
We can look at one of our clients for some answers.
Hint, the flavored water company you should definitely order, is going through this right now. We are helping them transition their account from another agency to in house by running it with their team and helping them hire to replace us.
From a cost savings standpoint, the Hint team made a smart decision by firing their old agency and working with us to move in house. They saved money and made more money, which is ideal and not subjective.
By being honest and transparent about their expectations and our expectations, it’s been a great project for both sides.
I give them a lot of credit for making that decision, as politics always come into play. The person who is the point of contact to oversee the agency must give up control for at least a short period of time when making this transition.
The other issue is deniability. Because when you have an agency, even if performance is worse, at least you're ignorant of it. You can cover your ass. But now that digital marketing is in house, you actually have to own it. You have to take responsibility. Which is scary.
The upside is, you’ll have more control than ever before. But the downside is, you’ll have more responsibility than ever before.
As the movement of marketing talent shifts to the client side, it’s imperative that you navigate this process strategically and transparently.