The successful in-housing narrative is a myth

Everyone seems to be asking the same question at the moment: "Should we in-house?"

The answer depends on who’s asking, but the universal truth is that no one is ready to do it alone.

I get the in-housing trend, I really do. It’s rooted in outdated non-transparent media models and has inflated with the growth of digital. And it’s good PR. We all love stories of self-starters claiming their independence.

But are these in-housing success stories telling the entire truth? Let me be brutally honest: more often than not, "in-housing" as we know it fails.

In-housing 101

In-housing is as simple as saying goodbye to your agency and handing over media buying to your marketing department.

First of all, you need to decide what exactly you want to bring in-house. In-housing doesn’t mean the same thing for everyone. But it never means in-housing everything. We’re talking about a complex spectrum of activities that I’ve written about previously in more depth.

Next comes the question of motivation. Why do you want to in-house? If you’re looking for transparency, then I hope you already own your data and contractual relationships with platforms in-house.

If you’re coming from a financial perspective, you might be underestimating the actual costs of the in-housing process. More on that later.

And if it’s trust and "taking back control" you’re after? You might just need a better agency.

The hidden costs of in-housing

In-housing is not cost-effective.

It’s easy to underestimate how long it takes to actually make in-housing a profitable endeavour. Booking.com is often touted as a successful example of in-housing, but even its chief marketing officer has admitted that the process has been challenging, and results "a mixed bag".

When major companies announce in-housing to be a financial success, what it really means is that they’ve renegotiated contracts with platforms and obtained better deals. It might look like they’re saving on the marketing budget once you take out agency fees, sure. But if you look at their P&Ls across the whole company, they might be telling a different story.

While saving in one area, unexpected costs will pile up. You’ll still be needing an agency in one capacity or another. For one, I’ve never seen a client build their own tech without external support. And what about training your employees? Or interim management while trying to build your in-house team?

And that’s not even mentioning HR and office space costs to support your growing teams… That is, if you actually manage to hire the right talent.

If you're unwilling to start spending more money once you've started the process, chaos will ensue further down the line.

People and processes

Building in-house teams is the number one challenge we hear about time and time again.

You need a brand that attracts talent you’re looking for (i.e. tech-savvy millennials, mostly) That means having a company culture that reflects what motivates millennials: personal development, feedback and flexible working. You also most likely need to be based in a major world capital to have access to the people with the specialist skill set you need.

The ghosting trend shows that finding the talent isn’t enough—retaining them is a whole other story. Tech and digital marketing have some of the highest turnover rates out there.

To build an in-house team, you need to be able to train people, motivate them, make sure they are invested in your company and enthusiastic about their career development.

The reason the agency model works

Even if the talent problem is solved, and even if budget is not an issue, there's an important reason why all advertisers, big and small, need agencies.

Take Disney, for example. They’ve in-housed their creative production and are investing in upskilling their employees in digital.

They're one of the biggest corporations in the world, and yet they still need the external perspective from agencies.

The bottom line is, advertisers that rely solely on in-house teams are at a constant risk of stagnation.

That’s because:

1. Agencies are talent magnets, offering attractive digital-first cultures, doing industry-leading work with groundbreaking tech and providing long-term career paths.
2. Agencies are better at future-proofing thanks to their centralised processes, best practice, training and tech resources to execute. They have good relationships with media owners, resulting in better support and access to betas, allowing them to adapt to technical innovations before anyone else.
3. Agencies can see the bigger picture and understand omni-vertical insights. Working with a range of clients, they have an in-depth knowledge of wider industry trends and are striving to do industry-leading work in order to stay competitive.

The in-housing process/endgame

In-housing success is different from one company to another, but what links them all is that the transitional period is drawn-out and messy, often with no end in sight.

It just doesn’t happen overnight. A roadmap and strategic direction need to be approved at the highest level of the organisation. Talent needs to be recruited and trained. Platform partnerships need to be redefined.

These things are expensive. And time-consuming. And they typically require external support to pull off. In-housing or not, the agency has never been more important.

Daniel Gilbert is founder and chief executive of Brainlabs