• by Jeff Larson , Op-Ed Contributor, October 2, 2020

Now more than ever, marketers need flexibility, integration and accountability on steroids so they can do more with less. But in their haste for efficiency, many CMOs are making a mistake –removing outside advertising agency partners vital for nimble performance and new ideas.

This spring, the Association of National Advertisers found 78% of marketers plan to use some form of in-house ad agency, up from 58% a few years ago. At the same time, Walmart pulled digital advertising away from WPP's Triad to form an internal digital team, joining such heavyweights at Verizon and Anheuser-Busch that emphasize their internal “agency” operations.

These marketers are betting they can control the elements better inside when the world is spinning out of order. In media, they assume they will gain cost, data, and pricing control. They often fail to realize they’re sacrificing critical perspective, creativity and expertise. A good agency can help them react faster and smarter to the constant change in consumer behavior, technology, and media opportunities. 

As in-house operations orient around fixed resources, they draw from a set number of minds with finite experience and skills, especially after COVID-related staff cuts. It also means dedication to a single marketing technology platform, especially if it is built internally, in part because there is no room for a full-time expert to constantly scout and curate new tools.

By contrast, agencies – particularly media agencies – are built for change. They work with dozens of clients, so their people encounter a multiplier of experiences. They can test hundreds of ideas at any one time across clients and markets. They constantly evaluate new technologies, and have the latitude to pick the right tool of the moment. In the past three years, my agency has worked with four different attribution modelers as competition keeps producing a better platform. 

Having spent most of my career as the leader of in-house capabilities, and now as an agency leader, I can see all sides. My conclusion: In-housing runs the danger of a fixed response to a dynamic world unless it is balanced by the right expansion joints. This makes a hybrid model the solution with the greatest impact for brands.

For our part as an agency, that means supporting the in-house trend rather than fighting it, offering ourselves as an extension of the in-house team. For clients, the solution starts with concentrating brand thinkers in-house – people who can organize the needs across all facets of the business, marshal first-party data, direct the work and oversee lower-funnel tactics like search and direct response. From there, clients inclined to pull in-house should consider three viable variations.

Outside for branding / Inside for direct response. One of the puzzles in marketing is the interplay between upper-funnel branding and lower-funnel direct-response ads designed to drive immediate sales. If you bring direct-response (e.g., paid search, paid social, or programmatic) in-house, lean on the evolving experience of outside agencies complex and integrated brand and media strategies for upper- and mid-funnel communications.

Outside for paid / Inside for earned and owned. A second marriage that works well is using internal marketing teams to manage "owned" and "earned" media, such as web sites or social media community management, and outside media for paid advertising. This works because community management is closely tied to customer service and product knowledge, areas of internal organizational strength, while outside acquisition relies on knowledge of what works in the competitive arena – an area agencies live or die on.

Outside for new data / Inside for CRM.  Internally, sales data or CRM systems can give marketers great nuance on customer valuation, needs, or interaction pathways. Outside agencies can push your "data thinking" by showing new sources for targeting, tracking, and evaluation of customers. From DMPs to ACR to device-fingerprinting to third-party data overlays, there is a panoply of precision targeting your internal teams may be unaware of or behind the curve in.

It’s time for marketers to change their instincts around in-house. Instead of either-or, think AND. Instead of control, think flexibility. Tomorrow’s winners will prioritize resourcefulness over fixed resources.