In-or-Out: Should you bring your agency in-house?

It’s popular to argue that bringing an agency in-house is a great way to save money. On paper, that might make sense. Agencies of any sort can be expensive, and it’s tempting to think that cutting the line item off a spreadsheet will be guaranteed savings, but bringing any type of agency work in-house involves a lot more than simply cutting ties with an external agency. 

Moving in-house may in fact be the right decision – but instead of only thinking about cost on paper, here are some questions to ask:

What’s your business case, and what are your KPIs?

Meaning – aside from maybe saving some money, what will moving in-house do for you? Perhaps you need to turn around ads more quickly, and bringing your agency work in-house will increase efficiency. Maybe you want a more hands-on relationship with marketing, or media buying or creative. Or maybe you’re working with a big organization across lots of verticals that need to cross-promote easily, and keeping everything internal will reduce friction. Identifying specific KPIs can help you decide if it’s smart to transition.

Hybrid or fully in-house?

Instead of bringing everything in-house, you may want to introduce a hybrid model. This means that, rather than outsourcing everything to an external agency, you’d have an internal team that works alongside the agency to develop and execute strategy. This is a great option for those who want to be more hands-on, without completely building an internal agency. It can also reduce pressure on your internal team, because they’ll be able to enlist an agency for specialized tasks.

What will the transition look like?

Building out a robust internal structure will take time, and unfortunately, most companies can’t stop marketing on a dime while something new is put into place. It’s a little like jumping from one speeding semi-truck to another on a busy freeway. So before deciding to change over, it’s important to figure out a plan – how are you going to manage the switch, without disrupting your current activity? 

Do you have the team you need?

What skills do your existing employees have, and who else do you need?

Agencies employ a lot of people with specific skill sets, who can handle specialized tasks. If you bring your agency work in-house, you’ll likely need to recruit people who have those skills – plus, you’ll have to pay them! So while you’ll no longer be paying an agency a big chunk of money, you may still be hiring and paying new staff members who may not have the same level of experience and expertise. 

You’ll need team members who have memorized the IAB standard, who know how to assign budgets within DoubleClick For Advertisers (DFA), Meta, and Tradedesk. You’ll need people who understand how to create campaigns for Instagram and TikTok, who are up-to-date on AI tools and standards. Plus, depending on your business, you may need people who know how to work with influencers. Agencies already have these specialists on staff – your existing marketing department may not. 

Do you have the infrastructure?
In addition to finding people, you’ll need to figure out internal systems to keep everything running smoothly. What tools will you need? How will projects be organized? What will you need to put into place, and how will it be structured?

Are you ready to negotiate with ad platforms?

Agencies work with specific representatives within Google and Meta. Because agencies are negotiating for multiple clients and have money to throw around, the representatives they work with are often willing to negotiate better deals. 

But if you move everything in-house, then suddenly, you’ll be working with representatives who work with clients, instead of reps who work with agencies. That means you’ll have totally new representatives, will have to negotiate new deals, and may end up losing money on ad spend.

Additionally, with a range of privacy and AI related legislation on the horizon, agencies need to be on top of the legal implications of different ad strategies. Most agencies have lawyers employed who are experts on this subject. But if you bring everything in-house, your team will have to take on that responsibility, and your legal team may not be prepared. 

How will accountability work?

Once nice thing about outsourcing? There’s one party to blame.

It’s not nice to say, but it does make life much easier. If something goes wrong with an agency, you can always leave them and find a new agency. But if you move everything in-house, and something goes wrong, you can’t just fire your entire internal team.

If you choose to move things in-house, you’ll need to figure out an accountability structure. Who are the stakeholders, and who will be responsible for issues? How will you handle

Do you have an incentive structure?

One possible downside of an external agency? If you’re paying an agency a fee of 5 to 10% on your marketing spend, then there’s an inherent incentive to increase the spend. Even at the most customer focused agency, you might hear someone excitedly say, “We just landed an account with $50 Million in spend next quarter” and not “we’ve just landed an account that’s super results focused and wants us to drive an 18% improvement in CPA”.

On the other hand, that incentive structure usually means the agency is always trying to retain your business. There’s a baked-in need to deliver every week, month, and quarter. An in-house team may not feel the same pressure, and won’t always be pushing for more.

So will you actually save money?
Maybe! But numbers on a spreadsheet are not necessarily a good indicator of whether that will happen.

The worst case scenario is: you try to bring your company’s agency work in-house, but building out the infrastructure proves to be too demanding, the learning curve proves to be too steep, and after spending a truckload of money, you have to switch back to outsourcing. That’ll cost a lot more in the long run – not to mention manpower and time. Unfortunately, we’ve seen well-intentioned attempts to bring agency work in-house crash and burn with disastrous results.

We’ve seen that in-housing works best when the in-house team is treated like an actual agency. This means they’re set up as a separate business unit, and other units within the corporation deliver briefs to them just as they would with an external agency. Internal agencies should also operate with their own P&L and internal chargeback structure. Basically, internal agencies work best when treated like actual businesses, rather than an ordinary or embedded team.

Additionally, in-housing can be a great choice for companies that work across multiple verticals that benefit from cross-promotion. For example, Disney operates an in-house agency that is highly effective, because it enables them to be agile and develop campaigns across departments without an external middle man. Before deciding to make a switch, it’s important to identify good reasons to do so aside from savings. Moving to a hybrid model, or fully in-house model, may be a great decision, but it should be seen as an investment rather than a cost-cutting method.

Wondering what agency model is right for you?

Moving in-house may in fact be the right decision - but instead of only thinking about cost on paper, here are some questions to ask:

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