marketing in-housing trend

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Facing budgetary pressures caused by Covid-19 shut-downs, chief marketing officers (CMOs) are moving more PR and marketing functions in-house.

One-third of marketing work shifted from agencies to in-house personnel this year, reveals the 2020 Gartner Marketing Data and Analytics Survey. Some of the most common functions CMOs moved in-house include social marketing (53%), audio-visual production (44%) and public relations (39%). CMOs expect that trend to grow slightly into the first half of 2021.

Futile Cost-Savings Efforts

While CMOs hope in-housing reduces costs, their cost-savings efforts can be futile, Gartner researchers warn. In-housing first requires putting people on the payroll, establishing new processes to manage the movement of work and investing in technology to support the changes. The strategy also assumes CMOs are able to recruit and retain the necessary talent. The shift from agencies to in-house staff is a long-term investment that involves more financial risk than relying on a contracted partner.

Agency Costs Still Rising

Ironically, overall agency billing continues to rise despite the in-housing trend. CMOs bring lower-margin tactical capabilities in-house, such as social marketing, creative production and traditional media management rather than more costly strategic services. That gives CMOs more control, but not necessarily significant savings. Likewise, major agencies are refocusing on higher-margin strategic services.

Gartner experts urge CMOs to take a holistic view of capabilities and avoid the trap of using the raw measure of cost when assessing the value of agency contributions.

A significant number of companies eventually return to agencies after in-housing fails to meet expectations. Only 32% of brands say in-housing increased productivity and just 27% say it increased creativity, according research last year by the Data and Marketing Association.

Steps to Counter the In-Housing Trend

Still, the in-housing trend poses real concern to PR and marketing agencies. Agencies can regain clients and prevent current clients from opting for in-housing by taking some of these key steps.

Staff appropriately. Account managers often handle multiple clients simultaneously. Agencies want high production levels from their personnel, but in-depth understanding of clients and their products and quality becomes challenging. Assigning fewer clients and less work to account managers produces higher-quality work – and commands higher fees, argues Jade Minh in Everything PR. Hiring more people to ensure quality work can be costly, but not as costly as losing clients.

Become more nimble. In-house communications teams excel at completing work quickly when needed, essentially on demand. To retain or regain clients, agencies must do the same, argues Marc Brownstein, president and CEO of Brownstein Group. “It’s time to make our own shops as adaptable and embedded as in-house teams, ready to deliver quick and dependable work with the full confidence of our clients,” Brownstein states in Ad Week.

Treat staff well. The ability to attract and retain top-notch talent separates agencies from in-house communications departments, Brownstein says.  Competitive compensation packages matter, but an attractive work environment and listening to employee requests are also important. In that regard, permitting tele-commuting can boost both employee morale and productivity.

Seek a hybrid approach. In a new trend, agencies and clients collaborate to create a hybrid approach. Agency personnel work as extensions of in-house teams, says Chris Laas, head of digital marketing at Etch. Some functions, such as strategy, planning and execution, are well-suited for shared ownership.

“Client-side teams often suffer from a scarcity of time to actually get things done. Often, they are involved with multiple meetings on a daily basis, which leaves them less time to actually execute any of the planned marketing activity,” Laas writes.

Establish transparent communications. Frequent and frank communications is key for healthy client-agency relationships. “We have worked hard to have transparent and supportive dialogue with our clients on where they may find efficiencies in-house versus SCOUT, and also cautioned against them where we think it may not be the best business model for them,” Cheryl Maher, consumer division president at SCOUT told Marketing Land.

Agency personnel can now easily communicate with corporate clients with online video tools like Zoom or Microsoft Teams.

Offer stellar media measurement and monitoring. Comprehensive social media monitoring combined with online news monitoring offers one of the surest ways to please clients. Business executives consider social media monitoring among the most important services PR agencies offer, after only earned media services, according to the PR Customer Experience Benchmark Report from Researchscape International.

In addition, social media listening is one of the top public relations trends, according to the Evolution of Public Relations report from the Association of National Advertisers. Advanced PR analytics services, often combined with web analytics, SEO results and market surveys, can show that the PR agency met its goals.

Bottom Line: Under financial pressures, more companies are bringing PR and marketing tasks in-house. Whether or not the strategy reduces costs or improves efficiency is debatable. Communications agencies can stem the trend by employing relationship, productivity and communication strategies that benefit both clients and agencies.

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This post was first published on Dec. 3, 2019, and updated on Nov. 25, 2020.