The 9 levels of in-housing: Where do you fall?
The path of in-housing can feel like you’re staring up Mount Kilimanjaro alone, but with the right gear and Sherpa, it is possible to make this challenging climb and thrive in the thin air.
More and more marketers are taking their business in-house -- 38%, according to research by Digiday. What's more, 78% of the Association of National Advertisers (ANA) members already have an in-house agency. It would be hard to blame a marketer who doesn't fear missing out on this trend if they’re still using an agency -- until we peel back the numbers a bit on the responsibilities marketers are taking in-house.
ANA's report showed that various services are taken in-house, with creative the highest at 76%. Although, I’m surprised it’s not more. And the Digiday research revealed that 37% of respondents planned to bring some portion of the programmatic process in-house this year.
Rather than getting caught up in the hype, let’s look at in-housing for what it is: A multidimensional decision with benefits and downsides at every level. By multidimensional, I mean there are many components of in-housing and decisions required around the ownership of each.
However, the motivation to pursue in-housing often comes from organizations that want to address deep-rooted concerns over the absence of control, visibility and internal skill sets in an outsourced model.
With that in mind, here are nine levels of in-housing to help you determine the appropriate amount of responsibility and involvement needed for in-house tasks:
1. I want to know exactly what I’m paying for and that all parties are operating ethically and fairly.
The ANA’s famous “kickback report” showed that rebates and nontransparency were more common than marketers were comfortable with. As a result, marketers have taken measures to ensure financial transparency throughout their media supply chain -- and rightly so.
At worst, this can be achieved simply by being the party receiving and paying the media invoices from all parts of the supply path. Full in-housing is not needed to achieve this objective.
2. I want to own all contracts with technology and media vendors, especially if I transition agencies in the future.
One of the many benefits agencies bring to marketers is prenegotiated contracts with major technology, media and research vendors, with rates likely better than an individual marketer would get directly. However, sometimes paying a little more in contracts with media vendors to run advertisements is worth a marketer’s peace of mind and is easily accomplished without significant in-housing.
3. In addition to the above, I also want to own all of our data assets.
Often (and unfortunately), agency contracts specify that the agency owns the data generated within media spending. We’re not sure why a marketer would agree to that term, and there are plenty of honest, smart agencies that will not require this. But a marketer can still choose to own the data without doing the data science and analytics work. Just be prepared for those cloud data storage bills!
4. I believe our organization is better-suited to extracting analytics and insights from our data.
There are some organizations where data, analysis and insights are truly a core competency. Without owning the data storage and analytics, these enterprises would be weaker in other areas of their businesses. This can still be achieved without in-housing media strategy or execution, so long as the marketer’s analytics teams work closely with the agency to act on the data insights.
5. I think we can buy media more effectively on our own and achieve better results.
This is where the air starts to get thinner on the ladder to in-housing; we’d recommend that “only experienced climbers go beyond this point.”
As all media channels transition to some sort of preemptive, auction-driven buying model, there will be no way to buy media “cheaper.” However, there will be ways of buying media more efficiently or “on sale,” given a marketer’s business goals. To do this, it takes experience, expertise, analytics and often engineering resources. Before proceeding, consider that you may need a better agency more than you need to in-house.
6. I want to own the strategy and connect it to the buying.
Now that your oxygen mask is securely fastened, you’re off and running. Not only do you have fingers on keyboards internally, but well-versed media strategists who can talk tech, finance and consultant-level strategy interfacing with the buying teams.
7. I want to own our testing strategy and execution in-house.
This is high-level agency or even management consultant territory. Mapping out, owning and executing a full test-and-learn strategy is time-consuming and resource-intensive, and it requires long-term focus.
8. We must own broader marketing efforts, such as all customer acquisition or retention.
Ad tech, meet martech. This requires an enterprise to not only execute on all cylinders within the advertising side of the house, but to connect those efforts to website a/b testing, customer relationship management (CRM) and lifetime value planning.
9. All marketing must be done in-house for our organization to succeed.
As an airline, you need to employ the pilots. As a restaurant, you need to employ the chefs. And as a business enterprise, without owning every part of marketing, you believe your enterprise can’t succeed. Few make it this far, but for those who do, the decision is obvious from the start.
The path of in-housing can feel like you’re staring up Mount Kilimanjaro alone, but with the right gear and Sherpa, it is possible to make this challenging climb and thrive in the thin air. If your current agency hasn’t made this climb before, then take the time to find a specialized partner who can get you to the top safely. This guide can serve as a starting point for that discussion and journey.