What’s Driving the Shift to In-House Marketing?
Several recent surveys and research reports from AMA, Forrester, Ad Age and B2B indicate that companies are increasingly moving their digital marketing departments in-house. What’s behind this trend and when should marketers consider in-house?
Why In-House is Attractive
1.) Shrinking budgets and the demands on marketers to do more with less makes agency fees the first target for cuts. Do the math. For a company spending as little as $2,000,000 per year on Pay Per Click search, agency fees typically run from $300,000 to $500,000 – more than enough to effectively run an in-house program with plenty of money left over (to fund more PPC spend or other digital programs).
2.) Dollars are shifting to Digital, particularly to tactics that can be handled successfully in-house.
As the economy becomes more uncertain, marketers are moving money out of conventional budgets and into more measurable digital tactics. Search is a top contender for that money, with a projected growth of 14% in 2009.
Search is particularly well-suited for in-house. In fact, the growing trend to bring search in-house started long before the economy tanked. SEMPO’s State of Search survey in 2007 predicted in-house search departments would continue to bloom as search became more mainstream and finding qualified professionals became less of an issue.
Social Media is a tactic born for in-house because consumers don’t want to talk to an agency. They want to talk to someone inside of the company and with whom they feel can make a difference. In fact, many social media and marketing programs originate in-house, as employees use Web 2.0 technologies and experiment with marketing applications.
3.) Vendor fragmentation is costly and drives down results. Many companies use multiple digital agencies for different specialties (search, email, mobile, social, etc.) in addition to traditional advertising and PR agencies. The cost of all those vendors adds up. Even more troubling is the lack of integration (a key factor in achieving marketing ROI) that occurs when so many vendors have a spoon in the soup. Moreover, as digital marketing grows more complex and “real time”, the need to shift dollars on the fly becomes critical, which makes a multi-vendor scenario even more unwieldy and impractical. Transitioning to in-house cuts costs, enables better integration, and can increase the speed of shifting on the fly to increase ROI.
4.) Increased pressure to demonstrate ROI drives more investment in integrated measurement/metrics; bringing everything under one roof makes the measurement task more manageable. The pressure is on for marketing to deliver results, which means that the spotlight is on MEASUREMENT. Unfortunately, turning marketing data into useful, meaningful metrics to promote better decision making is never easy. Add multiple vendors using different metrics and tools that must be integrated not only with each other but also with in-house measurement systems and you’ve got a real headache on your hands.
Taking marketing in-house isn’t a complete answer to measurement problems, but it certainly helps when the in-house team is controlling everything from soup to nuts (i.e., the execution of a particular tactic, how it is measured and compared to other tactics and how it integrates into a holistic measurement system).
5.) In-house has an advantage in the important areas of continuity, control and big picture strategy. Personnel turnover in the agency world has always been high; in a bad economy with advertising budgets being cut it will likely get worse. Companies just can’t afford the time it takes to get new people up to speed.
According to Forrester’s recent research, in-house agencies have a very low turnover rate and more staying power (average was more than 5 years). The in-house agency also gets high marks from senior executives for understanding the company’s overall business objectives and taking a strategic approach.
6.) Companies are happier with their in-house departments than with outsourced agencies. 99% of senior marketing executives surveyed in a recent study by Forrester said their in-house agency delivered better value compared to external agencies.
When to Consider In-House:
1.) You plan to significantly increase your digital spend.
2.) You are committed to exploring emerging channels (Remember, an agency learns on your dime).
3.) Talent is available fir digital channels that are important to your company.
4.) Smart people within the organization can be trained for some of the roles required (existing staff bring knowledge of the organization to the table; if layoffs are in the future, this could be a win-win).
5.) Tools are not cost-prohibitive.
6.) You’ve completed an Audit of your in-house needs, including an ROI calculation.
7.) Senior leadership is on board.
If you are considering transitioning some or all of your digital marketing in-house, contact the professionals at Serengeti Communications. We specialize in creating successful digital marketing departments for clients in a wide range of industry verticals. Our program will take you every step of the way, from determining if in-house is right for you, to finding the right people, tools, and training programs. 703-556-3390; www.serengeticommunications.com
