Why (some) in-house agencies fail

Intel shuttered its Agency Inside shop earlier this year

Working as a consultant with brands’ in-house agency teams and agencies’ in-house production companies, as well as external partners and vendors, I’ve seen pain points on all sides of the industry.

It’s competitive out there, and it’s only getting worse. That is why we’re seeing more brands take advertising work in-house.

The pros for bringing services in-house are plenty, especially in an era where agility and speed are highly prized. In-house teams enable brands to manage data and processes more carefully, often bolstering efficiency and speed. Team members inherently understand their roles and tasks, they’re immersed in the brand, understand its products and services, and share its vision.

Cost savings are also a factor: in-house employees are on salary and usually flexible to working overtime, whereas agencies that are working and charging for overtime can push a brand over budget.

But while the trend to bring work in-house can have benefits for a brand, this decision can also backfire if the reasoning behind doing so isn’t solid. For example, Intel recently announced that it’s scaling back its in-house agency in an effort to focus more on technological leadership and B2B audiences.

While that might seem counterintuitive to the in-housing trend, it happens more than you’d think. I’ve seen brand clients invest in internal production teams, only to discover that the investment costs and the resulting lack of creative choice were restrictive and had lackluster ROI.

In-house teams can lack the breadth of perspective that external vendors can provide. The Pepsi/Kendall Jenner fiasco resulted from that kind of tunnel vision often seen from in-house brand teams. This familiarity can also breed a lack of creativity resulting from in-house teams struggling with a lack of A-list resources and available team members.

And it’s not just brands that struggle with staffing, I often see agencies with internal production shops bring projects in-house that a junior editor should be given, but due to a lack of available staffing, senior staff ends up adding it to their workload and being underutilized in other areas.

Lastly, while in-house teams make total sense for a steady workflow that needs quick turnarounds, it doesn’t always suffice for a big, long term project like a Super Bowl spot or major rebrand.

An external agency, on the other hand, can bring the kind of fresh perspectives and new insights that kick-start innovation. While the agency might lack an intimate understanding of a brand’s internal workings, their team of specialists can conquer niche and highly specific projects.

Agencies also have a more diversified talent pool to tap as needed, unlike a brand that needs to pay a pricey salary when bringing in additional brainpower.

But one of the most prevalent problems I’ve witnessed when a brand picks an external agency is a disconnect between the brand and the agency. If the agency doesn’t proactively keep the client in the loop, and vice versa, it’s easy for them to become detached from their work, unclear about expectations and disappointed in results.

Ultimately, the best choice is the one that does the better job of addressing the challenges and priorities of the brand. To assist in the decision-making process, brands and marketers need not only a clear sense of these pros and cons, but a strong understanding of the kinds of projects that are better outsourced versus kept in-house.

Key projects to in-house

Projects that are intrinsic to the brand’s internal workings and have high strategic importance are perfect for a brand’s in-house team. This includes managing customer data, media planning and ROI tracking.

For an agency production studio, video production, testing and edits, as well as projects with on-going iterations, are all well suited for in-house teams. Because they require quick and nimble work flows, on the spot testing and continuous communication, internal teams are better equipped to make live updates and tweaks.

Additionally, digital and social media work is well suited for an in-house team for both brand and agency, given the real-time responsiveness that is required.

Key projects to outsource

When it comes to content development – including TV and photography, analytics, design work, and campaign execution – go with the experts. Outsource highly specialized work to specialists or an agency. These types of projects can benefit from a broader pool of talent and the support of an external vendor. Unfortunately, those highly specialized experts are often the most expensive, but the spend is well worth it.

After weighing the pros and cons of each option, and getting a better understanding of what projects call for what resources, brands can choose the right balance for their needs. Just like every other business decision, you need to make this one based on careful consideration and forecasting.

In a future that’s all about speed and agility, brands that put the time and effort into figuring out what to keep and what to give away will come out on top. And as the advertising landscape shifts and agencies continue to consolidate and become more transparent about their strengths, marketers will be in an increasingly better position to make informed decisions.

Michelle Bradley is the founder and managing director of MBc

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