In-sourcing Digital Advertising

The trifecta of success

There is a time in the maturity cycle of a digital business when it quite concretely makes sense to in-source advertising. This time is usually punctuated by 3 aspects: 1) a positive business case that allows for just as many (if not more) competent humans to work on your business 2) an elite digital leader that is proficient in selecting, onboarding and keeping top talent and 3) an organization that is ready to embrace and fund an internal digital capability. Any of the 3 gone array, the project will at best cost more than it should and at worst cause chaos in the trenches of one of the most crucial operating department.

The business case

The business case - particularly in the first year after kick-off - often supersedes simply comparing the agency’s retainer to the team-to-be-recruited remuneration. For one, the recruitment cost of highly specialized marketeers is often a large chunk of making this a reality. Even when internal recruiters are able to attract the right talent, the process typically lasts longer than anticipated since they are competing for highly coveted candidates. And then there is the handover period when the agency and new recruits need to work side to be side to ensure a smooth transition, without loss of business and just as importantly without anyone jumping ship before they even got to be onboarded, The longer this takes, the higher the costs.

Fees for media buying platforms (e.g. DV360, SA360) will typically increase as the advertiser has less of a negotiating power that naturally comes with a lower total spend when compared to the individual advertising agency. This should be costed separately taking into account how the media budgets are meant to scale in the upcoming 3 years. Additional tools - like planning and project management systems - that might have come free of charge through the agency now need to be layered on top.

If you are truly realistic and committed to retaining top talent you will also have to factor in the ongoing cost of up-skilling the team in a domain that is driven by continuous technological advances. Ensuring the new team has the same level of exposure to industry developments as the agency is easier said than done are requires active involvement and a hefty budget for conferences, courses and networking opportunities.

It’s tempting to incorporate the revenue upside of insourcing starting with the first year of on-boarding. However, the reality is it will take a minim 6 months or more after the entire team has been recruited until they can truly form enough synergy to enable them to exceed the productivity of an external agency. Being on the side of caution is advised.

The leader

Depending on the scale of the business, the speed of recruitment and the incumbent agency’s level of collaboration. insourcing can easily fill the better part of a week. Between recruitment, onboarding new team members, handovers, project management and ensuring continuity of operations, the project can spiral out of control. It’s wise to quantify from the get-go how much time in-sourcing will take and whether it is reasonable for someone internally to manage it alongside commercial responsibilities.

The practicalities involved in managing an internal team - oftentimes with direct and indirect reports - are very different to the practicalities involved in managing an external agency. If the leader in charge doesn’t already have the required experience, they will have a much smoother landing if the organization actively facilitates formal and informal learning. It is essential that a structural plan is clearly articulated to help the manager transition. Ideally the sponsors of the project at an organizational level pro-actively offer their mentorship and create room for growth - including the inherent mistakes.

Retaining talent, particularly in the digital space, is a front-of-mind concern even when teams are stable. But when teams form, storm, norm and not quite yet perform (at the tip of their maximum potential) retaining a fresh crop of talent should become the very first priority, above all else. Immediate commercial pressure knocking on the door? You’re better off alleviating some of that with your external vendor. Transition from incumbent agency not going as smoothly as possible? Increase in resources on the agency side. Un-anticipated workload? Increase in resources on the agency side. Which further advocates for a buffer budget in the original plan with which the “unexpected“ can be covered.

ORGANIZATIONAL transformation

One of the pitfalls of in-sourcing digital marketing is recreating an internal version of that; often called the in-house agency. This format certainly has its merits, particularly in very complex, matrix organizations where the central team is not in a position to hold P&L accountability. In all other cases, an in-house agency will not perform at the level of a fully integrated marketing team working closely with the product, trade, IT, finance and CS departments. This also means that the newly created team is a lead decision maker in the business rather than a service provider. This sounds like a menial difference but it requires a complete senior management mind-shift.

Digital marketing is no longer an abstract entity that waves a magic wand but a real department composed of real individuals with clear responsibilities. The organization needs to be educated on what these roles entail, what are the processes and SLAs for getting work over the line, what are the limitations and - inevitably - the gaps in knowledge, technology, seniority. Creating workflow transparency as much as possible is crucial but not enough (tools like asana can serve this purpose). Some departments will need to be restructured in the most extreme scenario to cater for the new dynamic.

Ideally, the strategy of the department becomes the holy grail of the operations and singing mantra of the leadership team. The marketing functional leader tirelessly advocates - perhaps to exhaustion - on what the team is set to achieve by when and how the operate. This will create the necessary space and empowerment for an elite digital marketing team to form and eventually perform.

conclusion

Being tedious about scoping all costs elements in the business case, up-skilling the functional lead and ensuring the entire organization dynamic fits the newly in-sourced digital marketing department are all crucial. The last point is the one most typically overlooked as it is not immediately urgent and often times less tangible. But the “transplant” can only be successful if the entire organism accepts it.