Behind the buzzword: In-housing
How to ignore industry noise and make the right decisions for your company
|Aug 21|| 7|
78% of some 400 marketers that The Association of National Advertisers (ANA) surveyed in October 2018 said their organizations were actively engaged in in-housing. Similar research conducted 5 years earlier in 2013, reported 58% of ANA’s surveyed marketers having an in-house agency. A more recent 2020 survey conducted by IAB and Accenture counted 69% of brands across the US, EMEA, and LATAM who have either partially or completely moved their programmatic (display, video, CTV) buying in-house (with some interesting regional variations in adoption). It’s a bonafide buzzword especially in the context of programmatic, but also creative, analytics, data, content, social, search, and just about any other corner of production, execution, and advertising efficacy one can think of.
Like many other adtech & martech buzzwords, in-housing is one of those concepts that seemingly everyone in the industry is required to have an opinion on. The choice presented to marketers often appears to be binary: you’re either fully on board the in-housing train or you’re considered a laggard. As with most extremes, the best fit for most marketers tends to be a hybrid approach somewhere in the middle.
Buzzwords aside, it’s natural that companies continuously evaluate which functions they need to fully own vs which ones can and should be handled by external expertise. It’s also helpful to think of in-housing as a state, rather than an ultimate outcome and acknowledge that what worked over the past 3 years may not be the setup you’ll need for the next 3. If you were an early in-housing adopter, 5-6 years in you may be re-evaluating your strategy and staring down team scaling and career pathing challenges. If you’ve successfully in-housed search and social, you may want to try to bring creative in-house next, but will need a different playbook. If you’ve just gotten started with your media in-house team, you may be finding that the results your competitors are claiming are more challenging to attain than they’d let on.
Why should you care?
In-housing is often a multi-year organizational commitment and process that requires different approaches depending on clearly identified short-, mid-, and long-term goals. When you decide to in-house you’re essentially taking on an entirely new business function, expertise, and commercial model into your company that may be well outside of your core competencies. Your existing organizational structure may need to adjust to accommodate a new in-house team, and everything from reporting lines to P&L may need to be tweaked. It’s very similar to how your corp dev team may approach acquisitions/M&A; in lieu of build/buy/partner, we offer the following 4-step framework to help guide in-housing decisions and successful implementations:
1/ What’s the key driver?
Key drivers behind serious in-housing considerations tend to fall into three groups:
Lower costs: The proliferation of easily accessible self-serve advertising platforms and a variety of adtech and martech SaaS solutions is pushing brands to reconsider some of their existing media agency relationships. If there’s no significant commercial advantage of working through an agency then taking some or all of the management in-house may yield comparable results at a lower overall cost. This is an especially popular driver in times of crisis (indeed, most brand conversations we’ve had in the past 5+ months have revolved around cost reduction) and usually a leading concern for brand teams responsible for media buying.
Gain more control & transparency: Many brands are looking at building more robust data capabilities and making sure they have the technology internally to truly capture ways their customers and prospects interact with the brand and inform what type of messaging and products they should be promoting next. Transparency is an ongoing concern, too: understanding where inventory is bought and through which partners enables brands to intelligently pick the tradeoffs they want to make. Usually analytics, data, or customer experience teams champion this driver.
Increase internal capabilities: Brands are looking at building internal know-how that will enable a more strategic approach to marketing, measurement and buying, as well as being able to better manage external partners like technology vendors and agencies. This driver is usually embraced by operations and executive teams keen to build up organizational capabilities.
Most organizations will want to achieve a mix of all three. Settling on which one is the most important short- and mid-term makes it easier to identify the starting point and sequence of initial projects, ‘choose your own adventure’ style.
2/ Where should we start?
This may seem trivial but the most important step you can take as you’re contemplating in-housing is to make sure everyone involved understands exactly what you mean (and what you don’t mean) to in-house.
In an advertising context, whenever someone mentions in-housing it’s usually in the context of programmatic buying - but that may not necessarily be the best starting point. Once you’re clear on your key driver(s), we suggest mapping out requirements and scenarios different functional areas want to answer via in-housing and tracking them based on maturity. For example: your analytics needs may be relatively simple while your media buying may be much more sophisticated. This dimension will help you prioritize goals and sequence projects.
3/ What do we need to succeed long-term?
“It’s not about in-housing everything, it’s about having talent that is able to have the right expertise and the right conversations with media agencies.”
-- Nic Travis, head of digital marketing acceleration, Lloyds, speaking with The Drum
In-housing is often approached as primarily a technology challenge: if we just find the right execution partner, they can solve all of this for us easily. That sounds great in vendor sales decks but doesn’t do justice to two other key dimensions that need to fall into place for in-housing to succeed: process and people.
Once you move some of your operations in-house, the nature of your client-agency relationship will change (hopefully for the better). When P&G started to move their creative and production in-house, they took the opportunity to rework their agency structure and settled on what they call the ‘fixed and flow’ agency model which allows them to bring on smaller, more nimble partners in addition to the committed amount of work it’s executing with core partners.
“As part of [our] overall agency reinvention, we’re discerning between what work we should do versus what work an agency should do or any kind of supplier. It’s people trying a whole bunch of different things and moving in and out.”
-- Marc Pritchard, P&G Chief Brand Officer speaking with Digiday
Since in-housing has a multi-year arc it’s important to consider career pathing even as you bring on your first team members. This is very much a chicken and egg type of problem: your existing organization will need to accommodate new skillsets and it doesn’t do anyone favors if your org structure will only allow you to hire someone whose title reads ‘Specialist Level 3’ as opposed to the more industry-friendly ‘Senior programmatic manager’. For talented subject matter experts your usual promotion schedule may not move fast enough to recognize their work and they may be tempted to jump ship. While some light org (re)structure is likely needed, we also like to think of in-housing roles through the symphony orchestra metaphor: for a successful team you’ll need both expert individual musicians (your SMEs) and conductors to cut across functional specializations and ensure that different internal efforts aren’t clashing with one another.
“We realized that if we really wanted to be leading edge marketers, then we would need more expertise in the building, not only from a strategic level but a tactical level,”
-- Josh Palau, VP of digital strategy and platforms at Bayer, speaking with Digiday
Let’s bring our attention back to technology for a second to emphasize the need for planning out your vendor and partner ecosystem. As with most emerging disciplines it may be challenging to figure out who’s the right partner for you or what even is the difference between similarly-sounding vendor but it doesn’t have to be: your existing procurement processes may need to take a back seat in favor of targeted, short trials with a shortlist of vendors before you make that ~2 year minimum commitment and investment.
Process, people, and technology. This is starting to sound a lot like digital transformation, isn’t it?
4/ How can we continue to optimize?
Unless you have the luxury of building your entire marketing operations stack in one go, most companies will approach in-housing from a single entry point. The idea is to prove that it works in one area, then expand to others using a similar setup to execute subsequently (likely with a different selections of vendors and partners, and different internal teams supporting). The biggest benefit of any type of in-housing is the compound effect across different functional units that come from reducing cost, increasing internal capabilities, and gaining more control over various critical data assets. This is why it is important that when initially considering in-housing companies apply a holistic approach and map out mid- and long-term in-housing scenarios. If you’re the media team, and you know that analytics is likely coming in-house next, this may influence your vendor and partner selection decisions and factor in other teams’ needs in your own path.
There’s no need to shotgun this or stick to the initial in-house team’s setup. In-housing is less of an outcome and more of an ever-evolving process.
There’s a photo on Unsplash by the photographer Cindy Tang of an intact, small blue house perched on top of a larger structure seemingly following some calamity:
It’s a perfect metaphor for many in-housing efforts that may execute well functionally (within the blue house itself) but lack the foundation to really make a meaningful, sustainable difference in the organization (unidentified grey concrete structure). In-housing isn’t for everyone and there’s no one-size-fits-all model here; the key step on what is often a multi-year journey is understanding where the most attractive opportunities are for your organization.
“I believe in bringing in-house the things that make sense to get you the most efficient. But I certainly don’t see in my tenure as the CMO ever saying we’re going to build out full creative capabilities in-house and we won’t use agencies. […] There’s pluses and minuses to it and for some brands it works, but for a lot of brands that hasn’t, and you’ve seen them reverse that model.”
-- Andrea Brimmer, CMO Ally Financial speaking with Digiday
Success in in-housing can vary from team to team; within a larger company multiple teams may be considering in-housing efforts simultaneously. In that scenario how do you ensure that vendors and partners operating within one functional area (e.g. media) don’t exert outsized influence over your overall direction, prioritization/sequencing, and level of investment?
ANA study: The Continued Rise of the In-house Agency
‘Right-housing’ with Lloyds and Amex in The Drum
The summary outlook in the US, EMEA, and LATAM markets via AdExchanger
Some of in-housing’s more visible growing pains
Bayer’s 2-year plan to in-house all media buying
Cindy Tang’s blue house photo as perfect metaphor
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