In-House Versus Outsourced Marketing

Marketing is Moving In-House, But There are Caveats…

Based on Qualitative Research conducted by Q2 Insights there appears to be a strong trend toward moving human marketing resources in-house in San Diego. Qualitative Research tends to be exploratory and is used to obtain insights, uncover trends, and obtain a deep understanding of a topic or topics. Q2 Insights conducted 30-minute Depth Interviews with 80 marketing executives (CMOs, VPs Marketing, and Directors of Marketing) at well-known San Diego brands to explore trends in marketing. In 2017 and 2018 the study has been conducted in conjunction with Freshform on behalf of AMA San Diego.

Most of marketing executives interviewed for the “2017 and 2018 State of Marketing Study: A San Diego Perspective” state that they rely primarily on in-house marketing resources as opposed to outsourced. Many organizations have created their own in-house agencies to facilitate their marketing campaigns, improvise on branding efforts, and provide specialized services.

A small Quantitative Study (Newbase: The Evolving Marketer 2018) conducted by Synergy Research and Consulting with 120 Chief Marketing Officers (CMOs) in over 20 global markets between November 2017 and January 2018 has discovered the same trend. They concluded that 66% of global CMOs are planning or have already moved their human marketing resources in-house in lieu of outsourcing. While the sampling error around this study is large (+/- 8.95%), these findings underscore the trend found in the 2017 and 2018 State of Marketing Study.

Key Reasons for Bringing Marketing Services In-House

The key reasons offered by marketing executives in San Diego for bringing marketing services in-house include:

  • More control over in-house personnel activities
  • Greater trust of in-house personnel
  • Better and more efficient performance
  • Cost savings coupled with budget constraints
  • Quality control

The counter point to these reasons for bringing marketing in-house is that agencies are perceived by some to be better at out-of-the box thinking and methods, as they move at a much faster pace than an in-house team in an organization.

The trend toward bringing marketing in-house is real; however, there are caveats.

Size, Industry and Specialization Have Some Influence

In San Diego, the size of the organization, structure of the marketing department, and the industry in which the organization operates have some influence over whether marketing is in-house or outsourced; however, most marketing resources are in-house in San Diego. Some firms partner with freelancers, designers, or consultants on an as need basis to help with digital marketing, creative efforts, and specialized research. Partnering tends to occur when hiring full-time is not efficient for the organization.

The organizations that outsource offered examples of when they use outsourced marketing services:

  • An e-commerce organization is collaborating with an advertising agency to set up Bing, Facebook, and Twitter advertisements. They also collaborate with a public relations agency to get higher profile media content.
  • A company in the consumer goods industry that sells products online uses a media agency for specialized skills in Paid Search, Organic Search, and Mass Media Buying.
  • An educational institution is using agencies for advertisement buying, for pay per click (PPC) and search companion marketing (SCM) campaigns.
  • Several companies partner with agencies to provide a wide range of creative services such as creative content, inspiration, and campaign products. Creative services include digital marketing tools, UI/UX designers, video and multi-media production, search engine optimization (SEO), and digital advertising.

The global Synergy Research and Consulting study found that the quickly evolving nature of marketing, technological advancements, and the need to deliver short-turnaround projects are compelling reasons for outsourcing.

Synergy Research and Consulting found the following functions as most likely to be in-house: marketing strategy, product marketing, customer experience, and social media.

It is Tough to Justify Spend

Organizations find it harder to justify spend when they outsource; and tend to use agencies when it impacts the marketing return on investment (ROI). Promotion of services in-house or creating a team in-house with specialized skills is the current trend.

The Agency Perspective

One advertising agency executive in San Diego suggested that the pendulum swing between in-house and outsourced marketing talent is cyclic, and that the in-house trend is not here to stay. Based on his experience and observation, people tend to switch roles within organizations. Moving roles from analytics to branding can hinder skills gained in analytics, given the pace at which technology is advancing. In-house work might be under more control but would also require assessing the talent pool skills on a regular basis. Based on the business requirement, small-to-medium sized consumer goods companies tend to shift talent in-house to various roles that could hinder or deplete their skills in a particular domain.

Here is where the true value and potential of the external agency can be realized. Agencies have learned to do better quality assurance, better scoping, and develop better specs over time; they typically assess, and revise talent pool skills every four years. Revision of the talent pool is required by agencies to keep up with the quality of creative services provided.

The Harvard Business Review Perspective

In 2015, Mark W. Schaefer in his article in the Harvard Business Review identified six reasons why marketing is moving in-house:

  • Agencies are slow
  • Agencies are stuck on advertising
  • Continuity has become more important than campaigns
  • Companies no longer want to outsource customer relationships
  • Companies want their own data
  • Agencies may not attract the best digital marketing talent

In 2018 it may also be true that the economy is strong, and organizations can now afford to moving their marketing resources in-house.

The Reality and a Recommendation

Regardless of our opinion or preferences, it does seem to be that the trend toward moving marketing in-house is here to stay. Against this background, marketing continues to become more complex, fragmented, and requiring specialized expertise. It seems to me that the best approach for marketers is to become highly specialized, keeping up to date on marketing changes on a regular basis, despite the substantial challenges associated with this strategy.


 

About Kirsty

Kirsty Nunez is the President and Chief Research Strategist at Q2 Insights, Inc., a research and innovation consulting firm with offices in San Diego and New Orleans. She can be reached at (760) 230-2950 ext. 1 or kirsty.nunez@q2insights.com.

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