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

What I found most interesting in this survey is the comparative spending of in-house departments compared to agencies:

– 78.9% of the money spent on organic search will be spent by in-house departments compared to agencies at 21%.

– 6.8% of the paid placement spend comes from in-house, compared to agencies at 3% (search media gets the biggest piece of the paid pie)

Two thirds of all advertisers plan to handle the majority of their SEM spending in-house. Oddly enough, only about 12% of advertisers said they would consider bringing more of their SEM program in-house as a way of dealing with escalating paid placement costs.

Avoidance — Wait, this is going to require more work, right?

Denial — Why do we need this? Things are working perfectly fine as they are now.

Opposition — This is a stupid, unnecessary move that will be the end of us all!

Acceptance — There are some benefits to this change after all.

Overconfidence — Let’s do more of this, on a faster timeline.

In his article, “Are You Afraid of Change?” (Intelligent Manufacturing, 1995) Burton identifies four fear barriers people most often confront during the evolution of change.  He then provides good tips to overcome those barriers in order to manage change successfully. (This article is timeless – a great read!)

Many companies mistakenly assume that taking digital marketing in-house is simply a function of finding the right people (either existing staff or an outside hire) and then providing training for any skills gaps that may exist.  Not true!  Setting up an in-house department requires planning and preparation in multiple areas, including:

Process: The daily business of each marketing channel (search, social, etc.) must be translated into an efficient process that ensures ROI and scalability.  Going through this excercise will help you identify the skills and roles necessary and the requirements for a successful program.  Being able to communicate the details of the process will reassure those who doubt that in-house is possible.

Tools: What tools will your in-house staff need to do their jobs?  Who will be responsible for selecting these tools?  Who will be responsible for deploying these tools and what is the timeline for doing so?  Planning in advance will demonstrate that you have a handle on the workload required and calm the fears of those who suspect that your project will require too much of their time and be piled on top of their existing workload without prioritization.

Management and Organizational Structure: Who manages the in-house team?  Where does it sit within the existing organizational structure?  Does it shift power away from anyone?  Addressing these issues early in the process will help you avoid fear barriers based on culture.  It will also ensure that your in-house team isn’t left stranded, without the clout to do their jobs and make the decisions that accomplish organizational goals.

For most organizations, identifying roles, recruiting the right people for those roles, and establishing a training program can’t begin until the areas above have been addressed.  And don’t forget that the in-house team won’t be successful in isolation.  You’ll need a plan for ongoing communication and education within the organization, in addition to networking and knowledge sharing opportunities between the in-house team and others people/departments.

Transitioning to in-house can be an effective way to reduce costs, improve results, and keep your current staff employed in tough times.  The reward is well worth the work required to ensure a successful transition.