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Beyond the Statistics: Key Drivers Behind the Growth of In-Housing

Most marketing leaders are familiar with the growth of in-housing in recent years: according to one oft-recited survey, 72 percent of companies had in-house agencies in 2019 – a 12.5 percent increase over 2018 and a total 71 percent increase since 2008 (IHAF/Forrester survey, 2019).

COVID-19 and its disruptive effects on economies have driven the focus on in-housing even further to the forefront. For instance, according to our latest Customer Engagement Report, 50 percent of marketing leaders recently surveyed claim that they will move more work toward an in-housing approach as a result of COVID-19 impacts – compared to 21 percent who plan to move toward outsourcing.

Without a doubt, the in-housing trend has progressed to a level that will have permanent implications for the marketing ecosystem. These reports, however, don’t reveal the breadth and depth of considerations CMOs must weigh when making such decisions; nor do they regularly dive deep into the successes and failures of brands who actively pursue the shift to in-house.

In the first of this two-part blog series, we’ll take a closer look at the myriad factors driving more CMOs to take the in-housing route.

Going In-House for Better Outcomes

The trend toward in-housing seeks to address the perfect storm of factors that have come together over the past two years, including:

  • The leading role customer experience plays today in determining a company’s success or failure
  • The always-on demand for new, personalized, high-value content to continually elevate those experiences
  • A surge in data available to marketers today to shape and personalize that content, along with the channel, campaign, and product strategies through which customers experience it
  • Recent martech innovations that enable marketers to more easily put data into action
  • The rising accountability on CMOs to make sure tech and data actually deliver stronger marketing performance and a better customer experience

The coalescing of these factors has prompted a wide swath of marketers to take a frank look at their operations and consider in-housing in some form. As Procter & Gamble Chief Brand Officer, Marc Pritchard, described this process in Campaign: “Over time, our marketers have steadily outsourced our work. This has resulted in too many touchpoints between brand managers and consumers, and a lot of project management versus brand management. We need our people closer to the consumers they serve.”

A growing number of marketing leaders now see in-housing as a fundamental means to that end. As they see it, removing the barriers that separate the work of marketing and experience design from the data, insights, and ideas that fuel them enables them to act with greater impact, speed, and agility.

“You need measurement and analytics and insights to drive new programs and strategies,” argues Marta Stiglin, former in-house agency executive and founding member of the In-house Agency Forum. “Knowledge of the brand and integrating at all points of contact, particularly with what’s going on with digital, is of paramount importance.”

Greater Command of the Customer Experience

It all adds up to greater command of the digital experience the brand delivers to customers – perhaps the most vital competitive advantage a marketer can have these days.

Better command of the customer experience today also requires more – and more personalized content to feed it. Marketers are caught in the rush and crunch of needing to produce a myriad of different, individualized content offerings across a multitude of channels, from an individualized Facebook or YouTube placements to home page content to highly customized eCommerce offers.

Many CMOs see this work as too important to hand off and instead look to build up in-house capabilities to institutionalize this output. Bringing creative in-house gives you more control over the work and allows the development process to be more closely aligned with shifting business needs.

In many cases, it also gives marketing leaders more control over their adverting dollars. Increasingly held accountable for overall revenue growth – in no small part because of all the data and technology at brands’ disposal – CMOs see in-housing as a means to greater transparency and a way to better connect the dots between spend and performance. Direct access to data, control of resources, visibility into ongoing activities, and trust in their own metrics allows marketing leaders to more accurately apportion credit to the myriad touchpoints in a modern marketing mix and to more successfully identify the worth of specific marketing strategies, both as a whole and across channels independently.

Agility in the Face of Uncertainty

As Merkle’s surveys demonstrate, the move to in-housing has sped up during the pandemic. As Spenser Gordon, VP of digital at Anheuser-Busch recently tells Business Insider, "The past several months have highlighted the need to bring some creative and analytics in-house – something that's incredibly useful when quick pivots are needed. This has resulted in a much more agile marketing process, and rapidly increased the total creative output that we need."

That need to pivot and accelerate marketing activity was also a driving force for Verizon’s move to bring more work in-house. In the same Business Insider article, Andrew McKechnie, SVP and Chief Creative Officer, says that their in-house team enabled Verizon to quickly update the creative to ensure a uniform message across all its channels. "It would be difficult to do that if our core channels were fragmented with different agencies," says McKechnie. "It made my job of communicating clearly to our customers a lot more efficient."

In-housing Remains a Difficult and Risky Path

While the in-house trend has grown in popularity, it often fails to live up to this promise and in fact brings its own set of significant challenges. There are myriad organizational and resourcing hurdles, business and financial risks, and other roadblocks to building sustained excellence. These challenges ultimately hobble many in-house agencies and keep others from living up to their full promise and potential.

I’ll cover more about these challenges, and how a new breed of insourcing partners is helping companies take an innovative new approach to tackle them, in part two of this series.

Want to learn more? Watch our on-demand webinar on strategic sourcing here.