I’m often asked my opinion on whether advertising should be in-housed by advertisers or if an agency should be used. This question is often asked by media or tech vendors who are interested in understanding what the future might look for them, by agency folks who are interested in understanding the POV of advertisers and by fellow advertisers, both in-housed ones and folks still working with an agency. A few days ago I saw another post about this on AdExchanger and I thought I’d chime in with my two cents.
My answer, invariably, is that it depends on your business needs at a particular point in time. It depends on the following: Your end-goal, your resources (people and tech), your scale and the type of media you’re looking to buy. I’m going to try to go into details in this article based on my experience – my disclaimer is that this is only my experience and results may vary.
Your end-goal
Often the question of in-housing vs using agencies is asked as if the choice in itself is the end goal. The truth of the matter is, for advertisers, the goal is a certain business outcome. The choice of how to buy media is just one lever towards that business outcome.
Here are examples of some wanted outcomes: More transparency into the supply chain, being able to innovate more quickly, being able to retain some media knowledge to better your ad spend, lack of trust in the current agency models that are out there (not a good reason – but still a reason), being able to automate campaigns.
In some cases, for online pure players, the choice to bring media in-house is because of a certain asset that can be more efficiently activated in that way – 1st party data for example. It’s always more secure, if you have a significant amount of 1st party data, to share this data with as few parties as possible. To come back to the original point, if the business goal is data security, then it definitely makes sense to build at least some form of in-house advertising team.
Notice that I do not put cost saving as an end goal – to me saving money on advertising is a really poor reason to in-house a team. You’ll always get what you pay for and good programmatic talent isn’t cheap.
So point one is – know what your business goal is.
Resources (people and things)
We all have nice and lofty business goals – there’s the matter of figuring out, as objectively as possible, whether we have the resources to achieve that goal.
Here’s a few questions to help answer that:
-Is your finance team focused on cost cutting? If yes, you probably do not want to in-house. Why? Because agencies can always do with less (which is why they are struggling) but an in-house team with one person less than needed will suffer. If someone leaves and you suddenly can’t backfill, what will you do then? Ask people to do more? What if more leave?
-Can you attract the right talent? Your in-house team will be sitting in a silo, whether you like or not. They will, in most cases, be an agency within the business. To survive that you need to be offering something exciting. Do you have some piece of tech, data or a challenge that they cannot find anywhere else? Can you offer good comp?
-Can you retain the talent? Believe it or not most people do not want to activate campaigns forever. What is the next step after two years for your campaigns managers?
Scale and type of media
The biggest players in the market are Google and Facebook with Amazon catching up. Does your company have the scale to get enough support from these Behemoths on product? Maybe, maybe not.
What about if you are approaching publishers directly? Can you secure video inventory without a yearly upfront? No, I’m not talking about open market trash or outstream. I’m talking that sweet VOD inventory.
And the more important question is, going back to the point about business priorities, is why do you want to bother with this stuff? Is there a business reason for it?
A lot of media is still sold on upfront commitment. However, your goal may be pure performance. You don’t care about the placement, all you want is to optimize your campaigns to a certain business outcome.
This can also influence the way that you answer this question – if you’re not interested in upfront media and you can survive on Google Display Network inventory and Facebook Audience Network (which will be very hard to beat in terms of performance), then you may decide that there’s no need for the experience that an agency brings.
My answer
So to answer the question at hand, I’ll conclude by saying that in-housing vs using agencies is a spectrum. You can do both and in most cases the right choice will be in the middle, with a hybrid model of in-house experts that provide continuity on long term business goals and externals that have a pure media focus, that you can scale up or down when finance picks up the hatchet.
But most importantly it has to fit your business needs and you need to be able to build it.
Also notice that a lot of the reasons behind in-housing have nothing to do with the actual purchasing of media. The media buying part is actually not that hard.