One of the big trends amongst advertisers at the moment is “in-housing” – the process of bringing in-house some functions or skills previously managed by out-sourced suppliers; predominantly agencies.
The recent ANA report in the USA reported the following:
- In-house agency penetration has increased – 78 percent of ANA members have an in-house agency in 2018, versus 58 percent in 2013
- 90 percent of respondents said the workload of their in-house agency has increased in the past year
- When asked to identify a single primary benefit of having an in-house agency, cost efficiencies was top ranked by a wide margin
Flock have advised on many in-housing projects for media, data and analytics, design, creative and production. We carefully assess many aspects and look for risk, dependencies, enablers and alternatives. We take an objective independent point of view in presenting options.
Sometimes it shows that in-housing would be a disaster either in total or in part, and sometimes it’s a great idea. There is no right or wrong answer.
Even when a business case for in-housing is well made, the execution of the plan and transition to the new model will dictate success, and as such, the talent and leadership is a vital part.
So, whilst the press is full of in-sourcing stories and some consultancies (who should know better!) are touting in-sourcing as the ultimate solution, what are the downsides of in-sourcing? What can go wrong and what needs to be considered?
- Talent. Can you recruit the best talent? Can you give them a career path? Do you pay “right”? Can you lead and inspire your team? Can you give them skills training to sustainable improve them?
- Culture. Does your business culture allow an in-sourced team to thrive?
- Process. Do you have processes built to allow the teams to function well?
- Technology. Can you invest in the best and latest technology, sustainable for the long term
- Costs. Is it advantageous to have an in-sourced team? Some talk about saving agency overhead and margin and say that it “cheaper” to insource. Agency models have flexibility to utilise “fractional” full time equivalents, and to manage peaks and troughs of work, by bringing in specialist skills on projects when required – some in-sourced projects don’t, making them more expensive when all costs are considered.
- Independence & Plurality of experience. Agencies offer independence of thought, and they benefit from working on many clients. In-house agencies have to do what the CMO wants 100%, their careers depend on it. The in-house teams also only work on the one “client”, whilst this gives them deep experience on that one client, they lack any reference for comparison.
- “Reversibility”. What happens if the project doesn’t work? What happens if a new CMO wants to out-source? Can the in-house operation easily be unpicked – at what consequence and cost?
- Integration. How does the in-house agency impact integration of the consumer experience? Will the creative work all integrate well with that of the agency, and who integrates it all? Can the media plans and buys be well integrated if in-house and out of house agencies are not brilliantly synchronised?
So, if you are considering in-sourcing or out-sourcing please do look at a balanced view of pros and cons before leaping on the bandwagon. And, may be give us call eh?!
Contact Julie Marshall – firstname.lastname@example.org