The number of big brands moving their marketing in-house is growing, but whether that decision actually leads to lower costs and faster turnaround times is still a hotly debated topic.
According to research by the Association of National Advertisers, 35% of marketers have expanded their in-house capabilities for programmatic buying while decreasing the role of outside agencies. The hope for brands is that by keeping marketing in-house, they’ll maintain better control over their own company data and see more flexibility in the cost of individual campaigns.
But those benefits may not be as significant as many brands believe they will be, and the projected savings are often unrealistic, says Holly Robowski, associate director of paid media at Cardinal Marketing, an Atlanta-based agency that works with major brands like Papa John’s, The Athlete’s Foot, and Tropical Smoothie Café.
“The average salary of a digital marketing manager is slightly less than the average cost of a marketing agency. Right off the bat, it may seem financially savvy to go in-house, but this is where brands could make a costly mistake,” says Robowski. “Hiring a new employee is a big investment. After you account for benefits, training and overhead, this seemingly more affordable employee could cost far more than a typical agency. And if you want to build a strong in-house team, you’re likely going to want more than one employee staffing your marketing department.”
In addition to the digital marketing manager’s salary, Robowski says brands should also consider the time they are investing in getting that person up to speed.
“It stings when they leave—which they likely will, as 91% of millennials expect to stay at their job for less than three years,” she says.
While agency executives chafe at the idea of brands moving their marketing in-house, the shift has already begun. Global brands like Procter & Gamble, Unilever, and United Airlines have all increased their in-house capabilities in the past few years, in a move that Procter & Gamble Chief Brand Officer Marc Pritchard called “seizing back control.”
Surveying nearly 4,200 marketing professionals, Adobe and Econsultancy found that even more brand advertisers plan to bring content production in-house in the coming year. These brands believe that by in-housing the production of their ads and limiting the number of agencies with which they work, they will be able to save on costs.
Robowski claims those goals are often unattainable, and that moving marketing in-house isn’t seizing back control in the way that brands believe it is. Some companies have gone in-house, believing they can use technology in the same way agencies do, and many assume that an in-house, immersed creative will produce better work, only to find that the results are underwhelming.
“In-house teams simply do not have the resources to staff the specialized knowledge and expertise of each team and individual that makes up a successful agency,” she says.
Another approach brands can take toward marketing is to hire agencies for one-off projects, even while bringing the resources for day-to-day management of strategies in-house. In fact, agencies that can accommodate project-based work are actually seeing an uptick in business. According to a survey released earlier this year, 35% said a “majority” of their assignments are now project-based.
The days of being the agency-of-record for major brands may be waning, but Robowski believes there will always be value in the long-term relationships between certain clients and agencies. Robowski uses McDonald’s as an example of this. The fast food giant worked with a public relations agency for nearly 60 years, and rather than move in-house, the brand recently chose to expand its use of outside players by bringing two more agencies on board.
“It’s clear through this long-term partnership that they value agency work,” Robowski says.
Whether brands will agree with that value proposition and come back to their agencies after moving in-house is something that nobody can predict, as the state of the industry itself is currently in flux. Robowski is betting on agencies.
“I would argue that the best agency will always be better than the best in-house team,” she says. “Agencies will always be needed because they provide companies with an objective, outside perspective.”
Stephanie Miles is a senior editor at Street Fight.