Article

Dan Chorlton
Dan Chorlton 24 November 2020

Five Things to Watch Out For When In-Housing in a Recession

With the UK economy shrinking faster than it has done since records began, it’s inevitable that a knock-on effect has been felt across all industries, with marketing seeing its budgets slashed to their lowest level in 20 years.

CMOs are consequently looking to make savings where they can and in-housing has shot up the agenda once again, as brands seek to bring certain marketing functions in-house in a bid to save agency costs and have greater flexibility and control over their own data.  

But while cutting out the middleman and the associated costs might seem like good recession planning, it could actually end up costing businesses a lot more in the long run.   

So, what are the key things brands need to consider before moving their marketing in-house? 

What’s The Business Objective?

This should be the starting point for any business debating in-housing, but it’s amazing how often companies don’t fully think this through beyond cost savings. Conducting every marketing function in-house is an extremely complex and time-consuming process, so if the sole objective is reducing costs, then in-housing may not be the right solution.

For brands that want greater control over their own data, in-housing offers this, providing they have the ability to fully manage and analyse marketing internally. If this is the case, then in-housing is a no-brainer, because it’ll cut out time spent on agency liaison and any delays in the feedback loop between the agency and the business.

It may also be the case that a business wants to increase its operational headcount, and given that each area of marketing requires its own specific experts; in-housing is certainly a way of achieving this.

However, if a CMO is aware that marketing could do with an overhaul but isn’t certain of the best steps to take, then before making a decision, it might make sense to invest in external auditing to gain a more informed perspective.

Although major media auditing firms often command substantial fees for this undertaking, there are a number of SaaS platforms that offer this at a much lower rate. The important thing is that you work with a solution that uses human expertise as well as automation, as this will generate the best results. 

The bottom line is that objectives for in-housing need to be extensively considered before moving forward. Taking all marketing in-house will impact other areas of the business such as finance and HR, so it requires buy-in from all senior and board members before proceeding.      

Some Marketing is Harder to In-House

Marketing is a broad term spanning many different functions and roles. Then you move into digital marketing which covers individual specialisms such as search engine optimisation (SEO), pay-per-click (PPC), programmatic and social.

For marketers reading this, it may be that case that some of these are already managed internally, but given the unique differences between SEO and PPC for instance, these should be managed by separate individuals or teams who possess the right skills to execute them effectively.

Programmatic advertising is almost certainly the hardest marketing function to in-house due to the complexities of the technology, which involve harnessing and analysing vast reams of data. Building an internal adtech and martech stack to manage this, is not for the faint hearted, nor is it a cheap option, and is therefore typically reserved for enterprise-level businesses that can afford to pump millions of pounds into it.

For those organisations that have the budget for it, an in-house programmatic platform can make significant savings for a company in the long-run. But for those that don’t, a hybrid approach whereby you utilise an external DSP is a far more realistic option.   

The sensible advice would be that unless a business has a big budget and the potential to hire an extensive team, it should only look to in-house certain parts of its marketing mix. Paid search is probably the easiest, but even then, unless there is a world-class expert working within the organisation, an external partner is likely to drive greater success for the business.

The Right Talent is Paramount

It should be clear from the previous section that having the right talent internally is crucial to in-housing success. The positives of having an internal team manage the marketing functions are that they are already fully immersed in the brand and industry. That said, unless you have an exceptional team of talent, a good external agency will likely deliver better results, because they are experts in what they do and their reputation relies on it.

The one positive of the pandemic is that due to an increase in remote working, the pool of talent open to businesses is much wider. A business based in London could hire talent from pretty much anywhere in the world for instance, providing they have a good internet connection.

However, for US listed companies an increase in employees can have a negative impact on share price, which is one reason it may be more financially viable to outsource rather than inflate internal headcount.

It’s important for organisations to keep firmly in mind that it’s not possible to find individuals who are experts in all areas. I often see job adverts asking for someone who’s an expert in PPC, SEO, paid social, organic social, CRM, CRO and every other accompanying acronym, and think they must be dreaming.

The bottom line here is that to successfully in-house a business needs to have the right team of people on the ground, and this can be harder and more costly to accomplish than appointing an external agency. 

Time is Money 

There is a reason that many brands prefer to pay external agencies to manage their marketing, and that’s because they don’t have the time to do it in-house. Even if a company has employees who possess the expertise to competently deliver what an agency does, the chances are this isn’t the sole focus of their role. Therefore, before shifting any marketing in-house, brands need to ensure that team members have ditto the capacity of agency execs to deliver on the same objectives.

The consequence of bringing marketing in-house when there isn’t adequate resource to devote to it, means that not only will that particular marketing function suffer, but other areas the marketing team focus on such as pitching for new business, will also take a hit.

Staying Ahead of The Game

To recession-proof their business and stay ahead of the competition, it’s vital brands have the best-in-class media tactics and strategy. One of the benefits of using external agencies to manage marketing functions is that they have direct relationships with media owners and will always be up-to-speed with the latest developments.

When it comes to industry issues such as the deprecation of third-party cookies or Google’s latest changes, they will be able to advise on the best course of action and upskill the marketing team. They also tend to have a high turnover of staff, which can actually play in a brand’s favour, as fresh blood and eyes will help to keep a company’s marketing on track.

This is not to say that by owning their marketing in-house brands can’t take competitive advantage, but it will require having senior team members who absolutely understand how to translate a strategy into paid media.

There is no right or wrong when it comes to in-housing. A brand’s budget and internal capabilities will help determine whether moving marketing in-house is a realistic prospect or whether continuing to work with external agencies or employing a hybrid approach is its best bet. One thing’s for sure, in-housing is not a straightforward or low-cost option, although if executed correctly it can make significant savings for a business in the long-term.

While the imminent recession means saving money is top of mind for CMOs, it’s important they weigh up if in-housing is really worth the risk right now, or whether in the circumstances working with agencies that can deliver the best results for their business will ultimately keep them at the top of their game. 

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