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The Inside Truth: Why the traditional path to in-housing is often a tough climb

With the first of this three-part blog series, we took a behind-the-numbers look at the myriad factors driving more CMOs to consider shifting marketing work from external agency partners to in-house teams. While the benefits of in-housing may be numerous and compelling (greater command of the customer experience, increased adaptiveness, improved transparency), evidence demonstrates that building an in-house operation is not as simple and straightforward as it may seem.

The Challenges of Traditional In-Housing

One of the central themes that emerges from an array of studies and anecdotal reports is that in-housing is far more challenging than many companies initially assume, and tougher to sustain – even after years of finessing and fine-tuning. There are many organizational and resourcing hurdles, business and financial risks, and other roadblocks to building sustained excellence. These challenges ultimately hobble many in-house agencies (IHAs) and keep others from living up to their full promise and potential.

Brands contemplating going in-house in today’s accelerated environment must first come to grips with the hurdles and unanticipated pitfalls other organizations have faced when traveling this path:

Building the organization, processes, and management layers

Adding new in-house capabilities requires more than talent. CMOs also need to determine, develop, and continually optimize the practices, processes, and workflows to empower those capabilities. In a study by the Association of National Advertisers (ANA), 37% said their internal teams struggle with applying key marketing processes. Beyond that is the equally significant challenge of tackling the management layers, data collection and analysis, and other infrastructure required to deliver connected, contextual customer experiences.

Not every company has the luxury of time or the patience to work through this long and rocky process to get it right. A study by the In-House Agency Forum (IHAF) and Forrester Research reports that within the past two years, 65% of IHAs have undergone some sort of reorganization, and 42% of corporate marketers are unaware of what their in-house agency’s mission, purpose and/or objective is. Unfortunately, many remain unaware of their shortcomings until the in-housing transformation is well underway.

Overcoming organizational rigidity ­

When CMOs decide to onboard new capabilities, technology, and staff, getting the new teams to function coherently with the broader organization is essential. But, often, entrenched planning and business processes are out of sync with the demands of agile marketing operations. CMOs often tend to show a bias toward established systems and hierarchies.

  1. an effective and empowering culture
  1. organizational structure are the challenges of company culture – especially because IHAs share the parent company’s DNA. Many firms with an entrenched corporate culture, no matter how vibrant and progressive, find it difficult to sufficiently empower a new in-house agency to thrive.

Wayne Barringer, of Boeing Creative Services, has pointed out that in-house groups can easily become locked into an “institutional” mode of thinking that stifles creativity. Overcoming such challenges, Barringer maintains, requires a serious and sustained commitment to professional development for in-house resources.

Managing growth

Delivering on that kind of commitment is a real hurdle for many IHAs. Despite expanding team sizes, 67% of in-house agencies indicated in an IHAF study that they are not adequately staffed to meet the demands of the business, with the majority stipulating that they do not have enough people to respond to the rising influx of projects.

These financial limitations are especially problematic when you consider that growth and scaling are at, or near, the top of the list of challenges reported by respondents to a major ANA survey of marketing leaders. As Forrester notes, “faced with demands to be all things to all stakeholders, in-house agencies are taxed beyond their capabilities and forced to do more with less.” Good intentions aside, a poorly conceived or underfunded in-house entity can end up being a lackluster marketing partner to the CMO and an impediment to growth and change.

Sourcing, recruiting and sustaining digital expertise

Resource limitations are compounded by the inherent difficulties of finding and attracting skilled digital talent. One study found that 58% of survey respondents said that attracting and retaining the right talent is one of the biggest challenges of in-housing, while another showed 63% of marketers believe keeping that talent energized is a challenge.

Similarly, 43% of IHAs polled by Digiday Research disagreed with the statement that working at an IHA has made it easier for them to hire and retain staff. “Unfortunately for most organizations, the most critical talent needs are also the most rare and expensive to hire for,” said Matt Shinkman, Managing Vice President and Risk Practice Leader at Gartner. “Adding to this challenge is the fact that ongoing disruption will keep business strategies highly dynamic, adding complexity to ongoing talent needs.”

The operational impact of this struggle to source and sustain digital expertise? 41% of marketers perceive internal agency teams as lacking in digital know-how, according to Forrester’s Jay Pattisall.

There are numerous other challenges marketing leaders face on the road to in-housing – not the least of which is maintaining a solid focus on core business competencies while adding a slate of new marketing capabilities. Companies that take on the heavy lift of traditional in-housing must ultimately gain the agility to deal with changes in scope and scale of work – a not at all easy task in a time of such rapid change and unpredictability.

Finding a better way forward

In-housing is a vital and growing strategy for many brands, and denying its considerable benefits is unproductive. But, overlooking the roadblocks to successful and sustainable in-house operations carries its own perils.

CMOs with strong in-house ambitions need to seek a mature approach – one that delivers the advantages of in-housing with greater ease and efficacy, while reducing risk and disruption in the face of mounting uncertainty. We’ll take a closer look at how some CMOs thread this needle in the final post of this series.