What is the Optimal Advertising Agency Strategy? External, In-House, or a Hybrid Approach?

Advertising Agency and Media Services

There’s a lot of market research, case studies, and examples on category strategies for Advertising Agencies.

That’s why it might be a bit difficult to understand what’s the right path for your company, franchise, or even brand.

According to the ANA (Associated National Advertisers)

“The study, “The Continued Rise of the In-House Agency,” revealed that 78 percent of ANA members reported having some form of an in-house agency in 2018,”

So how do you figure out the right strategy for your team?

advertising agency
Advertisements
advertising agency

Advertising Agency Strategy Considerations

 

First, let’s take a look at some of the main considerations you should weigh when looking at  ‘Make Vs. Buy’ (In-House) in Marketing or Advertising Agency Strategy. Factors including:

  1. Nature of the Product
  2. Volume of Business
  3. Media Spend
  4. Technology Requirements
  5. Strategic Importance
  6. Consistency
  7. Product Lifecycle

For example, if the brand is:

  • In the Mature phase
  • Small budget
  • Has limited revenue (and declining/stable)
  • Doesn’t require strategic agency resources

You should think about bringing the services in-house. Simple services such as project management, marketing communications, and ushering it through any internal processes, will save in this strategy.

 

But, if you have Brand that is:

  • Strategically the most important brand
  • Large campaign size and spend
  • High quality is a top priority
  • Lots of technology is involved

You should consider fully or partially going external. It’s not to say if you don’t have the right resources, you couldn’t do this all internally, but rather due to the ability to scale and quality of production are typically easier to achieve when you give it to someone else to do it!

Pros and Cons of In-House Advertising

So we’ve taken a look at some of the factors you should consider when deciding to bring certain agency services in-house. But there are other things to consider.  Here are a few of those high-level factors that could help determine your position:

Pros

  • Ability to hire FTE or Freelancer
  • High-Level Brand Integration
  • Staff Retention
  • Process Control
  • Confidentiality and Transparency
  • Speed / Ability to expedite

Cons

  • Constant updates on technology
  • Burdened with the cost of internal training
  • Harder to scale up or down
  • Higher salary / OH costs
  • Creation of Internal processes

Beekman Associates – In-House Agencies Are the New Black

Advertisements
Advertisements

Procurement and Category Management of Advertising Agencies

In-house agencies can provide a range of services, including strategy, creative for traditional media, creative for digital media, and media planning/buying. Therefore, determining which of them to bring in-house can be a bit complicated. (Especially when you have a brand team that is stretched thinner than male pattern baldness.)

According to the ANA report, the services that have grown significantly over the past five years range from Content marketing, Creative strategy, Data/marketing, Analytics, Media strategy, Programmatic, Media, Social media (both creative and media).

So trying to identify the correct services can be a tricky situation. But if you oversimplify and remember the driving force behind all of this is cost-effectiveness, better brand knowledge, and speed, you can limit your focus. You wouldn’t want to bring in-house something that could detrimentally hurt the business in the long run. (Especially if you needed to scale quickly in either direction).

Procurement’s Position and Role

In an effort to simplify a complex topic, I’ve only included the basics to understand the Make Vs. Buy evaluation. There are so many other areas to evaluate, including actual and projected spend per brand, similarities between brands to share resources, etc. I could write a new version of war and peace to cover them all. Especially when you consider the intricacies of different industries.

So if you are going to pursue this strategy (that will cause immediate upheaval) – you should make sure you have your analysis of potential savings nailed. Since this is typically the driving force, you need to show the effort is worth the pain. Having anyone drastically change who and how they work with is tough enough. So make sure you can justify the change management to all of the team, not just the executives looking at the bottom line.

What is the Optimal Advertising Agency Strategy? External, In-House, or a Hybrid Approach? 1

In-House Advertising Analysis

 

This isn’t your typical make vs. buy analysis. You’ve got to sell your position to – well.. sales and marketing people!.

And that’s no easy feat! That’s why you need to spend extra time on the quantitative and qualitative analysis.

You could easily save $1M by implementing the strategy, but if the quality slips or you have to complex of a system in deciding what work stays in-house, you might as well forget it. That’s why understand the businesses’ priorities, is key to the entire process.

If you have a brand with unlimited funds, selling them on cost efficiencies might be a bad approach.

But if you have a brand who has had past issues with production services, but great strategy from their AOR, then it might be a little bit easier pill to swallow.

Especially when you are asking them to manage another supplier.

With Marketing teams, if you miss the intangibles they’ll continue to call you a cost-focused procurement parasite. You need to show they you understand what drives their business in being successful.

Procurement and Category Management Pro-Tips

 

Protip #1 – When you approach a brand to out-source all or part of their agency services, make sure it’s not going to slow down their processes. There’s nothing worse for a marketer if they think you are going to delay their projects.

 

Protip #2 – Make sure you have the benchmarking to support the case. I’ve seen where de-coupling production can produce savings of up to 20%. For some that can be immense savings, for smaller brands, it won’t make an impact on their bottom line.

 

Protip #3 – Make sure you focus on low-end creative work or other easily transitioned work or assets. Some internal agencies don’t have the technology to support some of the more creative and complex tactics, including DAM (Digital Asset Management) Software.

 

Protip #4 – Don’t bite off more than you can chew. Start small with a mature brand that will have limited impact and use it for a business case to expand to other, more strategic brands. Just don’t expect one that is in launch mode to drastically change their routine. during such a critical time.

Video Blogs

Would you rather watch a video than read a blog? Then check out more video blogs from Ms Category Management 👉🏼 Here

Podcasts

Would you rather listen to a podcast than a blog? Then check out the podcast links for Ms. Category Management 👉🏼 Here

What is the Optimal Advertising Agency Strategy? External, In-House, or a Hybrid Approach? 2
Advertisements

Start a conversation and leave your thoughts below!