"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Andrew Shebbeare, co-founder and chief product officer at Essence.
Let’s get this out of the way: I’m biased. I set up an agency 12 years ago, and I still work there today.
Before that, however, I built in-house media teams, first for a startup and later for the much larger company that acquired it. I’m a control freak by nature and was terribly mistrustful of agencies, so I assembled a 20-person team that handled media buying and planning, analytics, ad ops and so on. To this day I remain very proud of the work we did, though I have become more attuned to the potential downsides of in-house media management.
I’m not writing this because I am afraid of in-housing or believe nobody should do it. Far from it: If a marketer has compelling answers to these questions, in-house may very well be the way to go. What I have noticed, though, is that in-housing isn’t always done for the right reasons. This list will help marketers make decisions for sound strategic reasons and avoid hasty reactions to the headline of the moment.
The client-agency dynamic isn’t perfect, but it does create some helpful mechanisms for scrutinizing decisions and performance.
In-house marketers often struggle to create the same objectivity; they quickly become powerful, enjoying a relative monopoly of information and sometimes even cultivating a little mysticism.
Being human, these teams want to project success to their colleagues. As a result, it can be very hard to know how well an in-house team is actually doing. When was the last time you read a column from an in-house marketer admitting that it was really hard and they weren’t doing great, so they were putting their team on notice and reviewing their options?
Once a marketer has sunk a lot of time, money and reputational equity into building an in-house capability, it becomes especially hard to detach oneself and evaluate performance fairly. This is especially true of bespoke technology like customized bidders, tracking solutions, attribution methods and data warehouses.
I have met several in-house marketers who stubbornly cling to arcane platforms, accidentally embroiled in an ad-tech arms race in which they are vastly outgunned. It seems to me that the first generation of in-house DSPs in particular are starting to creak and become more of a burden than an accelerant.
2. How will you know what good looks like?
Worse than being outgunned is being outgunned without knowing it.
The in-house marketer is at a significant disadvantage without the support of an agency’s experience base to keep their perspective current and balanced. I remember making frequent proclamations that our work was “best in class.” In hindsight, that self-belief feels a little naive given how little I knew about the outside world at the time.
The space is evolving so quickly that staying current is a huge undertaking. Keeping abreast of the moves in the technology and platforms space, leveraging the latest in big data, learning how to operationalize machine learning, keeping on top of global governance and compliance issues and knowing what represents competitive pricing and what to press vendors for are all critical issues and much harder without an external reference point.
To really get to grips with all that is going on, you have to get past the case studies and sales pitches; you need to dig below the surface and often pull in outside perspectives. That is possible in-house, but represents a significant investment.
3. How will you keep yourself out of the corner?
I have found that in-house marketers often exhibit reductionist tendencies, whittling down their media investments to the safest bets until they find themselves optimized into a corner and their business shrinking.
Maybe it’s cause, maybe correlation, likely a little of both. Certainly in-housing is sometimes motivated by cost-cutting in companies that are struggling to find margin-positive growth. Yet I think the same skepticism that motivates mistrust of agencies can also manifest in marketing behaviors. Long-term investments in brand and experimentation for new sources of growth can get sidelined in favor of “banker channels” known to perform well. Oh, that way madness lies.
This isn’t just about psychology. Measuring brand health and the brand effects of marketing is more difficult than direct sales and benefits from some detachment and external comparison. Benchmarking oneself in this arena is especially challenging because there is no established currency for brand effectiveness.
4. How will you attract, retain and fund the the right talent?
Finding high-potential talent and architecting the right culture to help employees thrive isn’t just about providing a foosball table or a swanky office in SoHo or lower Manhattan. It’s about keeping pace with the needs of an extraordinary new generation of globally mobile, aspiring and principled tech-literate workers with a different barometer for workplace satisfaction and a healthy disrespect for conventional measures of career progression. While many client-side employers can do that, most struggle.
In-house marketers are also at a disadvantage when it comes to tapping highly specialized skills where they may not have the need for a whole person, the whole time. For the average mid-sized advertiser, advanced statistical modeling, big data solution design, proper privacy and compliance oversight and strategic partnership management might be financially unviable though dedicated in-house resources.
Even if you can get all the right people at all the right times, agency life has taught me that the variety agencies can offer their people is valuable for them and also for their clients. People get fatigued, but a new challenge or client relationship can mean a new lease on life.
5. Have you thought about the endgame?
In-housing got hip with the advent of mainstream programmatic buying. Marketers saw an opportunity to go straight to the source, platforms were only happy to oblige and agencies didn’t do themselves any favors.
Yet critical questions were glossed over that are now coming into focus: If all media is going digital and all digital is going programmatic, are in-housers ready to take on all media? Was that their intent, or has a tactical opportunity spiraled into something much less strategically palatable? If it’s not all programmatic and in-house, are “the leftovers” something to which they will be able to attract great agency talent? Will the benefits of proximity outweigh the downsides of fragmentation?
The ability to operate platform campaigns shouldn’t be confused with the ability to form solid perspectives about the broader media landscape, negotiate effectively and avoid finding oneself at an information or commercial disadvantage.
In the meantime, setting boundaries on this stuff is very tricky. It’s not uncommon now to see RFPs for management of programmatic media only, working alongside a “traditional” media team, or vice versa. Separating media along these lines is a tough proposition that requires inordinate amounts of refereeing and an ever-changing set of rules as different inventory sources become programmatically enabled.
6. Why are you really doing this?
The questions above might help marketers consider whether they could insource their media management. But the most important question is whether they should.
For some companies, marketing is their lifeblood and their media footprint is a virtual extension of their customer experience. Casual mobile gaming, for example, is really a digital marketing business first and a software experience design business second. For most, running a full-service media management business and all the apparatus to underpin it, keep it current and attract the right kind of people has the potential to be a grave distraction.
The best-run companies have clear strategic focus. Some may gain advantage from in-house media operations, but the rationale needs to be stronger than cutting costs in an industry with incredibly thin margins already.
I would contend that a well-managed agency engagement – with transparency, positive intent, the right compensation structure, the right ownership of data and platforms and alignment behind the right objectives – can be effective under almost any circumstances. This represents a whole lot less risk and effort than pulling media operations in-house. When it does make sense to move forward with in-housing, it should always be a long-term strategic business decision without even a sniff of either knee-jerking or empire building.