Marketing: Outsourced vs In-House

According to the 2016 Gartner Marketing Organizational Design and Strategy Survey more than half of marketing leaders say their current marketing organization relies heavily on agencies and third parties and only 19% have a strong in-house focus. Lack of Internal Team Coordination and Skills Gaps are the sources of multichannel struggles for nearly 40% of marketers. One-third of marketing leaders say they’d like to strike a better insource/outsource balance.

On the other hand, after a positive turn in 2015, the client/agency dynamic has hit a roadblock with the number of agencies reporting relationship improvements falling from 70% to 53% according to 2016 Digital marketing outlook by SodaReport. This is likely due to an increasingly competitive landscape, where clients work across multiple agencies and are feeling more and more pressure to not only produce successful marketing campaigns, but to also “out-innovate” their competitors in areas that are still relatively new, like digital experiences, customer lifetime management and mass creativity.

The most common functions for outsourcing? Content development and social engagement, strategy development, analytics or monitoring, design work, and campaign or multichannel execution.

Meanwhile, more and more businesses are opting to move at least some of their marketing functions in-house. Based on RSW/US 2016 Marketer Agency New Year Outlook Survey responses agencies may be underestimating the potential shift to in-house work.

When asked about their expectations, nearly a third of agencies indicated they thought they would see a moderate to large shift in work going in-house. From the Marketer perspective, 46% foresee such a shift.

Simplistically, there are two types of agencies: creative agencies that generate your key messages and content, and media agencies that run your campaigns and spend your media budget.

Creative agencies these days go wrong when they think they can still charge you $1 million for coming up with a 30-second TV ad that takes six months to produce. That slow, mass ‘push’ marketing model is obsolete. As the world of marketing gets closer to 100% digital, it’s about precision targeting of different messages to different customers, combined with high-speed listening, learning and iteration.

Media agencies go wrong when they push media dollars towards the areas where they make the best margins or require the lowest opex (typically TV, print, outdoor, radio and their own digital trading desks) as opposed to recommending the media that delivers the best ROI (typically search, social, email and digital video) in order to make higher margins for themselves from your media spend. Advertising agencies can survive …. if they evolve. Forbes got it right in a May 2015 article that reported, in no uncertain terms, that the “agency of record” is as dead as the dodo. Instead, a much more complex organizational model is required, which will definitely mean advertisers doing more in-house. Read more

Ben Legg is an engineer, author and serial tech CEO. At The Portfolio Collective, he works with entrepreneurs to reinvent themselves and society

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