The balance of marketing responsibilities assigned to external agencies versus their in-house counterparts is in a perpetual state of flux, as brands adapt to new technologies and shifting needs. Our current cycle, as probably most of us in the industry are aware, is indeed demonstrating a swing in favor of in-house efforts.
Much of that is for good reason: these internal marketing teams are reaching a level where they can challenge external agencies as far as the quality of the product they deliver, and are no longer considered purely a cost-saving measure. In-house agencies are also now pressing their advantage of operating close to the ground when it comes to the real-time shifts within their industries – perhaps more so in the tech sector. These teams know the business, and have the insights and low latency to act swiftly and decisively in their marketing planning and execution.
The debate marches on for most CMOs and their executive teams, over how to strategically invest in in-house or external agency resources (or a combination) to fulfill their particular needs. External agencies really ought to be turning this discussion on its ear by better acknowledging the decomposition of the classic agency model and embracing it. External shops should be maneuvering to provide, specific value in spaces where in-house agencies can best be supplemented.
Brands still need to discover the most efficient and effective balance between in-house and external agency resources – most have not yet done this well. The majority of brands shouldn’t try to do everything in-house, and, at the same time, they probably shouldn’t be outsourcing all work to an agency. But taking all of a brand’s marketing in-house misses out on the cross-pollination that comes from working with other clients in other industries, the very thing which provides external agencies with much of their quality and cache.advised a young magician on how to find a compelling voice: “Love something besides magic, in the arts. …You will never be the first [you] of magic if you want to be Penn & Teller. But if you want to be, say, the Salvador Dali of magic, well THERE’s an opening.”
In-house marketers can also dull their “pitch teeth” – that tenacity bred into those doing external agency work, where every idea, innovation, and expected campaign ROI must be fervently fought for. In an internal setting, where battling for fresh and adventurous ideas may mean pitching the same CEO each time, the will to fight too often fades.
Modern agencies can and should fare very effectively within current ecosystems that lean toward an in-house team, by providing complementary and easily applicable services – acting as the honey to their tea, if you will. An external agency well suited to working with a brand in this way breaks its services down into a clear menu of offerings. It acknowledges the decomposition of traditional retainer models (which is occurring anyway) and structures itself to deliver components, rather than full-spectrum services as a single offering.
For a brand, then, contracting with an external agency becomes like shopping at the grocery store for ingredients – maybe they already have pasta at home, but could use a good sauce and some Parmesan. However, because these components are very much integrated, it’s often going to make sense for a brand to have one agency provide a few of these services and not one agency per component (the equivalent of shopping at a different store for each ingredient in the meal). This is a win-win for brands and agencies in several ways.
Brands can apply greater scrutiny to each component offered by an agency, pressing for quality and efficiency in areas that may have been hidden in the mix before. CMOs or heads of marketing in charge of contracting external agencies can specifically measure and prove ROI out of their agency investments. They can then adjust their portfolio of those investments more intelligently and efficiently via the more measurable and plug-and-play nature of the component tasks provided for.
At the same time, agencies are enabled to focus directly on and provide the work they do best, proving their worth in bite-size chunks. This model will indeed force agencies to maximize efficiency within each component area where they offer services. But this is in many ways a good thing, allowing them to provide à la carte transparency and a greater focus on particular areas of expertise.
As the industry adapts, CMOs should expect to see a rise in external agencies offering pre-packaged marketing modules. Make no mistake about it: by shaping these modular components to fit and complement in-house agencies, this will be the model by which future external agencies help brands to complete the picture when it comes to their marketing efforts.