NEW YORK (AdAge.com) -- When CareerBuilder -- the nation's largest job site and a dedicated Super Bowl advertiser -- recently announced it would bring its account in-house, it raised plenty of eyebrows in adland. After all, even with the pressures of the recession and widespread cutbacks of ad budgets, few major marketers have gone so far as to pull accounts in-house.
To be sure, Careerbuilder is an extreme case. Its owners largely are struggling newspapers, and though the parting with its most recent agency, Wieden & Kennedy, was civil, its nasty divorce from Cramer-Krasselt a couple of years back is the stuff of water-cooler legend.
But upon further inspection, its case may not be that unusual after all. Four out of 10 marketers already have some form of an in-house facility, according to a recent Association of National Advertisers survey, and industry experts forecast the back half of 2009 could see more big marketers follow in CareerBuilder's footsteps. "We'll see more accounts move in-house to either save costs or maintain control," predicted Casey Burnett, consultant and director of West Coast operations for consultant Roth Associates.
So is a recession really a good time to ramp your in-house agency? Ad Age talked to the experts and came up with some pros and cons.
Five reasons to establish an in-house agency1. TO CUT COSTS Lots of companies use an in-house facility to handle functions such as collateral development and video production as a way to save. Long gone are the days of the typesetting machine, and thanks to technology many other capabilities from direct mail to website development may be executed by the marketer. And who knows? If you're really good, you might find yourself sitting on a new revenue stream, like Condé Nast and other publishers that have designed print executions and more for big retailers.
2. TO ALIGN YOUR BRAND MESSAGE Global brands that work with several marketing partners in far-flung places run the risk of a fractured brand message. Hyundai's desire for a consistent brand image worldwide and control to remain with its South Korean parent is what drove the carmaker to recently ditch its highly regarded U.S. agency -- Goodby, Silverstein & Partners -- and churn all work out of its in-house creative shop dubbed Innocean.
3. IT FURTHERS SPEED TO MARKET Nobody understands the marketer's business better than the marketer itself. Try as they might, ad agencies often aren't as familiar with the ins and outs of complex businesses like airlines, banks and health insurance. Not to mention that in a crisis, an in-house shop can turn on a dime to respond with communications.
4. IT KEEPS THE MARKETING FUNCTION TIED TO THE C-SUITE Working via an in-house agency could mean more involvement in the marketing process from the highest levels of the company. Forrester Research data show that nearly 60% of in-house shops report directly to the company's CEO or CMO.
5. IT LOWERS TURNOVER Ad agencies are known to have revolving doors that can take a toll on the client-agency relationship. In contrast, in-house agencies are known for keeping their departments stable; the average annual turnover rate of staff at an-agency is less than 5%, according to Forrester.
Five reasons to use outside agencies1. TO CUT COSTS If you don't already have a strong in-house capability, setting out to build one from scratch could mean steep overhead costs that -- particularly during these tough times -- could unnecessarily strain on your company's resources.
2. TO TAP THEIR EXPERTISE Agencies have a leg up by being out in the marketplace and in touch with a rapidly changing business environment. "For a marketer to be on top of that as well as innovation within their own marketing departments means they have to be a jack of all trades," said Lisa Colantuono, managing partner at consultancy AAR Partners. For example, fewer than 10% of in-house agencies have social media or ethnic marketing capabilities, according to Forrester.
3. TO GET AN OUTSIDER'S PERSPECTIVE Having an outside agency can prevent your company from being too insular, and can also be motivating. Nancy Hill, president-CEO of the 4A's, puts it likes this: "An agency works with a marketer much like a trainer works with an athlete, pushing her to perform better. It's true you could do it alone, but your results will vary."
4. TO GET ACCESS TO TOP TALENT Any recruiter will tell you that getting top creative types to focus solely on one client's business is a hard sell; they desire the variety of daily challenges offered by the opportunity to craft campaigns for a big retailer one day and a pharmaceutical giant the next.
5. IT CAN BE FUN Many marketers will say that their interactions with outside agencies are the most fun part of their work day. You may have to stomach a big ego or two, but the chance to work with an award-winning creative director is an exciting one for many.