Rethinking in-housing: It's not a binary choice

The topic of “in-housing” is being touted as the next big bet for forward thinking marketers or is the contentious panel debate topics at conferences where agencies and brands go head-to-head. In recent years, a slew of global enterprise brands are coming out saying they now have media buying functions sitting in their offices to address the always on needs of their consumers.

The argument for marketers is oftentimes aligned with S4’s promise to deliver “faster, better, cheaper”. Like many industry terms that rocket into the zeitgeist, “in-housing” is often misunderstood. Many marketers still see this ‘craze’ as a binary choice: to in-house or to outsource. All or nothing. To help add some clarity, I can offer up this fact: Almost every MightyHive “in-housing” client has maintained some or all of its agency partnerships.

There is a good reason for this - in-housing was never an all-or-nothing decision. Based on a brand’s individual needs, specific functions of its advertising strategy are selected for in-housing while others remain outsourced to agencies...and brands’ needs range widely:

• Greater transparency
• Speed to market
• Improved flexibility
• Privacy regulation compliance
• Data governance
• Cost savings
• Better performance/targeting
• More robust first-party data

Looking at the clients we have serviced, a significant proportion of clients generally look at in-housing purely for the data ownership and media consolidation. The goal was simply to establish control over their first-party data in the event they changed AORs or tech vendors sometime in the future.

Eliminating agencies was never on the table.

Top advertisers such as Bayer, Deutsche Telekom, Sprint, and Mondelēz have touted the efficiencies of in-housing, but each one cites a different set of benefits. Sprint, for example, cleaned up its tech stack to yield better insights and make its advertising more efficient. Mondelēz, on the other hand, built a closed loop attribution model and became the first company in its category to see a direct correlation between digital advertising and sales. Different companies, different in-house strategies, different results.

Market changes such as shifting consumer media habits, new privacy regulations, and increased competition will compel brands to improve in some or all of these areas...but they don’t make the decision lightly. Building an in-house agency is a serious commitment that takes months or even years. It’s disruptive, it comes at a cost, and it requires the participation of many departments including the C-suite.

(An example of a “hybrid approach” to in-housing where different levels of control are established with five key elements of a digital advertising strategy.)

Most brands we work with choose a “hybrid approach” to in-housing. For example, if a brand is seeking to establish ownership of its first-party data, gain transparency into its data analytics, and streamline operations, it might choose to in-house measurement and tech contracts, while continuing to outsource creative and media buying to their agencies.

We call this the “Spectrum of control” and the first step to any brand’s in-housing journey is establishing where they sit on that scale. To do this, there are five important factors to consider:

• Media budget
• Sensitivity of data
• Target audience diversity
• Diversity of product portfolio
• Need for agility

The next few years should prove pivotal with important changes already on the horizon for 2020. Government privacy regulations and cookie restrictions from the major web browsers will put an even greater premium on first-party data and data ownership. The ascendance of CTV and voice are further fracturing consumer media habits.

And according to Forrester’s Predictions 2020: Agencies report, in 2020 “a third of in-house agencies will include media operations that control substantial portions of the paid media budget.”

Whether it’s a digitally native business or a large multinational in a journey to future proof its digital footprint, many marketers will weigh the pros and cons of having media and/or creative functions in-house to keep up with an ‘always on’ generation.  For those considering it, plan for a two-front attack:
1) Adapting to current market conditions
2) Building an in-house solution that lasts for years and years.

A major step like in-housing is worth it when you get lasting results.

The writers are Kris Biti, head of  business development, MightyHive SEA and Adam Remson, content marketing director, of MightyHive.