5 Reasons companies are bringing their marketing in house

marketing in house

Here’s a significant trend described in a very fine digital marketing research report from SoDA — in the past year there has been a dramatic spike in the number of companies who no longer work with outside marketing agencies — 27 percent, up from 13 percent in the previous year.

This shift to marketing in house is even more remarkable considering the report also shows overall spending on digital marketing is going UP.

The shift in North America is a little higher — 28 percent. The association describes this trend as “alarming” (if you work for an agency) but stops short of fully explaining why. They say that more agency work is focusing on innovation and specialized tasks but don’t really say why more companies are bringing work in-house. A lot more.

Mitch Joel, president of Mirum, recently noted the movement of agency talent to the client side as one of the most disruptive trends in the industry right now.

What is the cause of this striking trend? I have a few thoughts about it. One of the best parts of my job is that I get to work with a diverse group of businesses — pharmaceutical, high-tech, manufacturing, retail, sports, and more — and I do detect a few common themes that could help explain what is going on …

1. “We’re too big”

An executive from one of the world’s largest ad agencies told me last year that his company was too big to compete in the lightning-fast digital space. “We have too many people, too many contracts and too many approvals to be able to react and work effectively in a real-time world,” he said. “The work is moving closer to where the customers are.”

2. Moving beyond advertising

A brand manager at a Fortune 100 company expressed deep frustration to me: “We want to connect to our customers in a new way. We want to leverage social media, content marketing, and integrated models but every time we ask our agency for a proposal, it comes back as advertising. I’m sick of it. I am ready to break our contract at any cost because they just don’t get it.”

Another brand manager told me that many agencies are creating social spin-offs but they still act like an ad agency. Perhaps the cultural transitions are not happening fast enough at these agencies.

3. A person is not a campaign

When I teach about social media marketing at Rutgers University, I often point out the difference between funding an ad campaign and a social media effort.

In an ad campaign, you make a pitch, win a deal, execute the creative, provide a report and start over. Agencies are generally funded and organized by campaigns.

But in a socially-oriented world, the connection never stops. You fund, staff, and execute continuously. The traditional agency model is not necessarily built for that.

4. Are you going to out-source relationships?

As analytics improve and Big Data gives way to the real insights in Little Data, we are able to drive our efforts down to individuals. I believe this is where the real power in marketing is going to be in near future — focusing like a laser on the most active customers driving our business (in the The Content Code book, I call this the Alpha Audience).

When the primary focus of our marketing finally shifts from mass broadcasting to discrete customer relationships, is that something we really want to send to an outside company? Do we want somebody else to own that?

5. Being irrelevant

Finally, I only have one data point on this, but I recently had a shocking revelation about the digital competency at big agencies.

I was brought in to do marketing triage for a large company in Florida. They had already fired two agencies before they hired me. When I was finally an “insider” I was allowed to see the two social media marketing plans that had been provided by the two previous incumbents (both large national agencies). I was dumbfounded by the total lack of understanding these plans demonstrated. They had provided formulaic, cookie-cutter approaches that were unrealistic, out of touch with the strategy, resources, and political realities of the company, and simply destined for failure.

I simply could not believe these well-known agencies had provided plans that were so … dumb. There’s really no other way to sugar-coat it.

Like I said, this is just one data point but if this is going on at other places, no wonder agencies are hemorrhaging.

Maybe this is a healthy trend. Maybe it’s time for companies to be more directly involved with their marketing, more accountable, and more intimately involved with their customers.

I would LOVE to hear your observations on this in the comment section.

Illustration courtesy Flickr CC and Holly Kuchera.

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  • Pretty well thought out post Mark! As a marketing manager at an ad agency (albeit a middle sized and boutique one) we have shifted focus from “advertising” campaigns to delivering full picture marketing to clients. What we used to do has completely flipped 180 degrees and added in quite a bit of new and different strategy into what we do for our clients.
    Some may argue that it’s not worth our extra time and dedication to learning and becoming experts in all new focuses of clients issues/businesses like social marketing, digital strategy, etc when we are more of a traditional ad agency. But to us it’s the evolution of the business and we want to remain relevant and that’s what it’s going to take.
    And it will only continue…and we are excited about it and having a good time doing it…excellent info again!

  • Frederic Gonzalo

    Oh boy, Mark, I think you are hitting a soft spot here that will surely hurt a few egos here and there… As an independent consultant, I am often called in to help clients with coaching and providing third-party expertise with hotels, destinations and other travel & hospitality stakeholders. They often deal with agencies that do an honest job, given the budgets and resources in place. But I have also seen some horror stories, like you mention here: cookie-cutter approach, recommendations to spend on TV… for a small B&B with almost no marketing budget, etc.

    I believe agencies that strive today are those that specialize or carved a niche with clients (restaurants, retail, pharmaceutical, etc.) or tactics in particular: digital, social, etc. Agencies that say “they can do it all”… eergh, I don’t think it’s a viable model anymore. My two cents.

  • Steve Woodruff

    When old business structures built on obsolete market realities collide with communication methods that are continuously re-formulating, this is bound to occur. I wonder what forms “nimble marketing” will take, outside of both large agency structures and internal teams? Maybe high-level consultants and SWAT team implementers will have a new place in the mix…

  • I think there are things that are always going to be better when done in house – content creation and relationship building are two prime examples. I think where agencies (good ones, anyway) can really help is strategy development and injecting creative ideas into a company’s efforts. Sometimes, companies have the manpower, but they just need someone to give some guidance.

    I do think there are other times when marketing agencies can be a great help – especially when companies lack the internal resources to get it done themselves. That’s where it can be more cost effective and efficient to outsource it. But, if you have the ability to create your own department that can manage the whole thing, it makes sense to bring it in house.

  • Marketing Director

    I’m happy for this trend. I prefer in-house because daily marketing tasks are usually small and numerous. And if a task takes me 20 minutes to manage the outsourcing of, but 15 minutes to do it myself…. I’m going to do it myself or have an employee do it. Plus, employees tend to be more accountable and involved than subcontractors. 🙂

  • Thanks Mike.

  • Thanks for adding your experienced perspective my friend.

  • Yes i think that is a possibility. Will be very interesting to see how organizations respond to a market that is not really friendly to hierarchy!

  • I agree Laura. In addition to strategy, additional resources, and creative, I would add “transformation” to the possible future role of agencies. For example, I see some cataclysmic shifts ahead for marketing, especially with technology impacts. I believe outside “teachers” will have to show the way. Thanks for commenting!

  • Good point.

  • You forgot one.

    It’s cheaper and you get better results.

    When I joined my former employer I pitched senior leadership on taking our paid search in-house. I fired the agency, hired two employees saved 40% of the cost and grew attributable revenue in the channel 30% the following year.

    Was then asked to duplicate that for 4 other business units inside the enterprise. Hired 9 more employees over the next several months and saved the business BOATLOADS of cash in agency fees.

    One additional pet peeve of mine (which you touched on above):

    There is no such thing as a “full service digital agency.” They only exist int he land of unicorns and faeries. You can claim all day long thaty you cover the full spectrum of digital channels and creative, but I’ve yet to see a high performing one. Most agencies have a strength – the dominant strand of their DNA from which their leadership sprung, and which dominates the biz-dev of the agency. Sometimes that’s paid search, sometimes organic, often display or media buying and advertising. That dominant strand affects decisions about resourcing, hiring, technology investments, partnerships, business development cycles and much, much more.

    I’ve yet to see a single agency do any more that 2-3 things well.

  • This is an excellent topic for discussion! I believe at a macro-level this article is spot on. When you start looking at things at a case-by-case basis, I’d say there are a couple extra things that stand out.

    1. “An Agency” isn’t always what you think it is.
    – This is a huge problem within the agency world in that many companies market themselves as “full-service” when rarely any of them are. Each agency has a strength and an area they are trying to build up; rarely is an agency strong across the board (think of buffet-style restaurants; there may be good food served, but odds are the broccolli isn’t cooked right).

    2. The “marketing” in digital marketing inhibits agencies on the PR-side of things from making headway.
    – After 5 years working at PR agencies doing digital-focused work, I can say that there are times where I’ve seen PR folks use their storytelling talents to assemble amazing content marketing initiatives (not always, but sometimes). However, because most of the budgets for this type of work map up to a company’s CMO, marketing and advertising agencies speak a more similar language with their in-house peers than PR agencies sometimes do.

    3. Agencies still don’t know how to budget for new models of marketing.
    – This one probably happens across the board; a lot of newer marketing strategies have not been previously priced-out and so within the bidding process, winning the business is more of a priority than accurately pricing it. So when the actual execution comes around, many agencies are not prepared for the investment, or hit a billing wall before the project is finished, which means the final product is half-baked.

    With the above drawbacks said, agencies across the board are adjusting and attempting to right these wrongs. These are generalities (again, a macro-viewpoint) that may vary day in and day out. Some agencies are doing a stellar job and sometimes, it is the in-house folks who haven’t properly adjusted their agency evaluation criteria when tackling these new projects (letting established relationships prevail over those doing the innovative work).

    Regardless, this is a topic I find fascinating and expect things to continually change over the next few years.

  • Heh your response is quite similar to mine; just reading after I posted mine. The caveat is the agencies are changing and trying to make themselves more efficient (sometimes…) as that is in their business interest.

  • Good topic Mark. Similar to what Sean mentioned below, my organization too has seen enormous cost and relationship benefits to bringing marketing in-house. Direct online revenues show an 100% year to year growth in our case.
    In #4 you touched on the future of marketing – Data leveraged personalization.
    The sooner an organization learns how to collect, analyze, leverage and finally innovate around data, the better positioned it is to lead in the inevitable data driven era of business. For example we are building a proprietary social platform that leverages all our existing social platforms as well as some exclusive databases we have developed under an extensive project.
    Through all this the biggest benefit is that the employees are learning how personal relationships across channels move the needle on growth. They understand the value of social channels and role they play. They see how each customer touch point offers a wealth of information that can inform future products and services. Products they have never imagined before.
    However, none of this happened over night. It takes time to secure buy-in for such a digital transformation of the business. And that loss of opportunity to get the organization ready for the era of hyper-digital customer activity is probably the biggest casualty when you outsource.

  • I agree with Sean and Frederic, be wary of “Wal-Mart” agencies – agencies that promise one-stop digital marketing services.
    I recently recommended some boutique agencies to a client, each with their own speciality. In the end, he decided to go with a large agency that offered everything from SEM and PPC to Content Marketing and Social Media managing.
    I think the underlying reason was he was confused about the complexity of digital marketing. Not able to separate advertising from social, he decided to go “department store” instead of “boutique”.

  • Thanks for the very detailed and interesting comment Jason. A legitimate blog post in its own right. Thank you!

  • These are HUGE topics Jacob. I think what you have outlined here is very significant, a keen insight what what we will be facing. One of the big issues is, how do we scale those personal relationships across big companies. Excellent comment!

  • I think a big motivator is, “what will keep me from getting fired?” Perhaps a perception of more risk with boutiques compared to a well-known giant?

  • Jeffrey Slater

    Mark, at Nomacorc, a B2B global marketing leader creating wine corks, we work with many agencies who have specific areas of expertise that we don’t have in-house. Some are one person shops doing SEO or can create PREZI presentations for us. I prefer to have as much core marketing competence in-house as possible and just outsource specialized needs. For example, we use several graphic design agencies around the world for various projects since we want to have a fresh perspective. Several years ago we brought PR in-house for the USA. The result was more senior focus and far greater results.

    I think the future requires fluidity, flexibility and focus.

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  • Sounds like a good strategy. By the way, we visited some wineries in New Zealand and talked up your product!

  • Kristen Gunn

    Mark, I completed the Rutgers program a few years back and speak to others about you and your insights regularly. My observations are interesting in that I work with small – sometimes one person businesses – and as a consultant, I actually suggest that they do their own, due to the fact that their clients are hiring them as a person – not working with their business (a personal connection rather than abstract entity).

    Some actually need help “sounding more personal” and less “pitchy” because they think they need to sound like a marketer – when in reality their clients want to hear their perspective and allow the marketing push to be invisible and work as an act of magic.

    I understand the “too big to move quickly” syndrome, as I previously worked for a large organization and saw that they were, as I described, “as agile as an elephant.” There were so many people to seek approval from prior to movement and action being allowed that we missed opportunities and the organization died as it was unable to adapt to the new environment.

  • William Pate

    I’m not going to elaborate much on it, but I do think that this is important:

    “They say that ***more agency work is focusing on innovation*** and specialized tasks but don’t really say why more companies are bringing work in-house.”

    While I just started as an inside marketer for my company (after years consulting), I can see where design firms (especially) can be critical to larger companies’ new products, new ideas, etc. Previous work with Dell, IBM and others showed me just how hard it can be to pull them toward anything even slightly “innovative” — that is, newer and different from that they’d already tried.

    I wonder what design thinking would do for PR firms/ad agencies.

  • William Pate

    I find this to be the case for extremely small businesses, too. I’ve often offered to just set them up and train them rather than bilk them like others might. And they are the SME.

  • Wow what a story. Thanks for sharing that Kristen. SO nice to hear from a former student. Thanks for your very kind words!

  • Good insight William. Thanks!

  • exigodm

    I agree with all your points Mark, I would add one more to the list. Creative, we have seen many agencies see digital and especially social effort as a creative billing opportunity. In addition they don’t have a clear strategies and supporting tactics for engagement or sales process.

  • Thanks for adding your persoective Alan.

  • Mark, Your article is encouraging to me. We are probably one of…well, hopefully only a few ‘smaller’ agencies across the country that are nimble enough, and experienced enough to avoid your described challenges of a larger firm. This allow a greater intimacy with our clients and the ability to execute campaigns that drive measurable quality results. I work for Interchanges out of Florida and we have been working with B2B organizations to generate leads and grow revenues for a while now. We are 14 years old so we have some tenure in the space. We have had to innovate quite a bit in the past few years to separate ourselves from the crowd and continue to deliver value to our clients. I can confidently say we now have a formula to be able to, paraphrasing Alan below, quickly develop clear strategies and supporting tactics for engagement AND sales process that actually drive measurable revenue gains. It does require us to be very nimble and requires a high level of competence on my team’s part to truly deliver but we are now building that into our culture and it seems to be working. It doesn’t hurt we have a couple of very unique strategies that work very well together; none of our which are Ad buys. For companies with a complex B2B sale, we have figured out how to help them set appointments with the influencers and the decision makers they are targeting, and then track the opportunities through to a sale. Oh, and we have also started offering a performance based option via a Success Fee compensation model.

  • I deleted 95% of your comment because it was a blatant sales pitch. That is not how it works around here. I would value you opinions and contributions to the community but forget the spam please. I see via the Disqus system that your reputation is “average” so others have had issues too.

  • louis

    Very interesting. I’ll share on FB

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  • This isn’t a surprising trend at all. From a talent perspective, I’ve had a lot of friends here in Atlanta move away from the agency side to client side. A couple of reasons:

    1. Agency employees are often stretched too thin. There are exceptions to this rule and not every agency is like this. However, many places drive a lot of hours for salaries on the low end. Client side opportunities often offer larger salaries and a little more stable work hour expectations. Who wouldn’t want to make more money working a few less hours per week?

    2. Because agency employees are stretched thin, the ideas are too. It’s harder to really invest in a brand and do a bang up, non-cookie-cutter job for a client when you have 12 other brands on your time sheet. Client side allows for more opportunity to really invest in one brand and watch it grow. Sure, client side often makes you do more job functions, but you get to see more business results from your efforts. .

    There are agencies that don’t fit this mold and have a strong focus on their value add for clients – but those are usually the smaller independent shops.

  • I totally understand your viewpoint, however, It wasn’t intended to be a blatant sales pitch. I was sharing that there are still some agencies out there that “get it” and understand value-to-the-client versus the billable hours agency model.

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  • Rodger

    You make some valid points. One you don’t consider is the communication perspective. In fact, online marketing literature, in general, glossed over this as if it’s inconsequential, which baffles me, because we are talking about communication.

    From this perspective, the organizations that are bringing social marketing in-house may be understanding themselves and their relationships with customers as deeply textured clusters of persons-in-conversation.

    Secondly, in-house marketing executives may also be realizing communication is substantial and that its properties have consequences.

    Finally, these same executives may be understanding that treating such things as beliefs, personalities, attitudes, power relationships, and social as economic structures as made, not found. From this perspective, they are seen as constituted in patterns of reciprocated communicative actions.

  • Nectarios Economakis

    Great article Mark! Thanks for sharing.
    The other element I would add is the measurability of media and its impact. Companies are starting to internalizing customer acquisition (paid media online, etc.) and keeping it closer to their chest.
    Why outsource when you can hire someone internally to do it for the same results. The good old adage of ‘math’ men is key; brands recognize the need to own their data. It will be more important strategically and easier to execute moving forward – so why not do it yourself?

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  • Very interesting perspective Drew. Good to hear from you buddy.

  • Thanks for adding your wisdom to the conversation Rodger.

  • That is a very key idea Nectarios. I can see that the application of algorithms and the interpretation of data could be a competitive advantage. If I wrote the article over again I woudl certainly include this point. Well done sir.

  • Agreed. Teaching and training is another great way agencies can add value.

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  • Brandon Stettenbenz

    Bringing reputation back into the fold, where it has always belonged, is a good move in today’s RT communication. That’s why I can’t agree with #1…a large company should have a well developed internal marketing/PR dept. They have the most resources and the most to loose.

  • Mark, Excellent post! Ted Rubin recommended to “get out of the campaign mentality.” and moving social in-house would be a first step. But once moved, they also need to become more responsive to events and dynamically address topics from various departments (sales, marketing, PR, CS, ) and different locations. The question is how to stitch together all these efforts and continue to engage. Top down alone doesn’t work.

  • I’m not sure I see the relationship between the first point in my post and reputation management. Perhaps I don’t understand your point sufficiently. Thanks for commenting.

  • Agree. I have also written about this topic extensively, especially when it comes to organization and budgeting. An example here: http://www.businessesgrow.com/2014/11/28/pr-measurement/

    Thanks for adding your perspective to the conversation.

  • I enjoyed your online talk — thanks for sharing. To emphasize the social in social media, we need to change how we manage and organize the process of creating content. And collaboration is key, both top down (to make sure everybody stays on the same page) and across each dept and location (to make sure the content is locally engaging). The challenge is how to trigger the organizational transformation to make that possible. I welcome your thoughts.

  • Incredibly interesting post Mark. I hope we get to cross paths at A conference soon and chat about this topic. I’d love to privately compare notes.

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  • Look forward to that Tom!

  • George Stenitzer

    At Tellabs, we brought agency work in house around 2006. Why? Too hard to find agency people who understood our business. Much easier and more effective to use that money to train people internally and build out a freelance network.

  • Thanks for adding your wisdom to the conversation George.

  • Great post Mark! It’s all about creating brand awareness on web, mobile, and social by diversifying your digital marketing efforts with an emphasis on local. The most successful companies I have worked with have complete visibility of their digital footprint on a location by location basis. Using analytical tools that allow you and your managers to know exactly what is lacking in your digital strategy is paramount in driving online and offline sales. A hyper-local focus, typically the opposite of what a traditional advertising agency promotes, is the key to engaging with your customers via social media channels, and gives you the ability to provide tremendous value based on consumer preference. If you are a successful company with a strong online presence and multiple brick and mortar locations, an important equation to consider is:

    Vc of company > Vc of competitors

    -Where Vc=customer value.

    Vc can be defined as Attributes/Price (You want to deliver more attributes for less cost). As long as the value perceived by your customers is greater than the perceived customer value of your competitors, you have a source of competitive advantage. As stated previously, one way to attain this is to focus on your local markets, engage your audience, and consistently monitor your digital footprint through the use of advanced analytical tools. If done right, this will dramatically increase your ROI and ultimately drive down your customer acquisition costs. The days of depending solely on National Advertising campaigns are coming to a close…The marketing world has shifted from pushing content, to more of a one-to-one messaging/engagement strategy. Technology has changed the way people interact with brands and purchasing decisions by creating intelligent algorithms such as NBO (Next best offer) used first by Amazon, which pretty accurately predicts the types of products and/or services we would likely want based on our search/purchase history, and recommends them to you. This is also the reason why brands like Coke decided to put random (but popular) names on Coke cans, in the hopes of connecting with people on a more personal level and driving brand awareness through social media tie-ins. If a consumer feels you care, and you provide continuous value, they will be a customer for life. Whether you think you can accomplish this in-house or not, is up to you.

  • Mark, this is a very insightful post. I have to agree with you on the point that many agencies simply do not provide the value that large organisations need to be successful. This of course has to do with the fact that they are not embedded and most really don’t care to be.

    You would be shocked to see the low quality of work on offer by large agencies (accompanied by the large B2B price tag to boot).

    When you’re on the client side you see clearly the benefits to bring your marketing “in-house” when faced with what’s available from the outside.

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  • Jason Bragg

    I recently was brought in by a company who used agencies in the past. I looked at their previous plans and was shocked (especially being in the healthcare industry). It was just advertising splashes around everywhere. No connection points between a true “patient experience”. No true referral program. My first year, we were up 19% in new patients because I implemented social media, and spread the money around on mass media for a more effective plan. We didn’t try to “sell” the patients but instead focused on giving them value with tips, tricks and valuable content. That added trust and respect between us in our patients and future patients.

    The thing is, I have experience in web development, graphic design, media buying, photography, social media, re targeting, content writing, videography etc …
    So I can create the plan, buy the media, write the content, design around the content and execute it all myself. I only hire out for printing and voice-overs. I love it, but I am sure for what I am doing, it would take a “team” at an agency and paying a lot more money.

    Article is spot on though. I feel in house is more “personal” and allows you to do more for the company. Now, I am involved in training and staff engagement. Something that agencies don’t spend enough time on.

  • Powerful example Jason. Thanks for commenting.

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