When In-Housing and Outsourcing Work Together: The Hybrid Solution
Introducing the Hybrid Solution
By William A. Lederer, Chairman and CEO, iSOCRATES
While many companies over the past few years – most notably Bayer and P&G– have moved the bulk of their digital/programmatic media and marketing operations in-house, most businesses have determined that a hybrid solution that makes the most of in-house and outsourced expertise maximizes results while delivering the best value.
This hybrid solution will look different for each company – playing to their business’ strengths while enlisting professional onshore or offshore specialists to handle the functions where they may lack expertise or efficiency.
While few companies go to the extremes – in-housing or outsourcing everything – let’s briefly explore each option.
In-housing Pros and Cons
In-housing (also known as in-sourcing or creating an in-house agency) is exactly what its name implies – bringing your media and marketing efforts in-house as opposed to outsourcing them to an agency or technology partner.
In-housing has been growing trend. A recent ANA study showed that 78% of ANA members had an in-house agency as of 2018 (vs. 58% in 2013 and 42% in 2008).
In-housing has especially been on the rise in the realm of programmatic marketing. Programmatic marketing accounts for more than 80% of the digital ad spend nationally, yet a study by Advertiser Perceptions reported that advertisers with programmatic budgets over $20 million estimated that a staggering 37% of that ad spend is wasted.
Adding fuel to the fire, agencies and media trade desks have recently been accused of less-than-transparent, sometimes fraudulent practices regarding programmatic media. It’s not a big surprise then that two out of three marketers plan to bring their programmatic efforts in-house by 2022.
While moving your programmatic media and marketing functions in-house has the potential to give you more control, visibility and data privacy, the move comes with many challenges.
The ANA study found that the biggest issues businesses faced when starting an in-house agency were managing workflow, scaling efficiently and managing resources.
In-house agencies are also notoriously difficult to build from the ground up – start-up costs can be prohibitive and there needs to be a high level of commitment.
Talent engagement and acquisition is also a huge issue – especially in the relatively new specialty of programmatic marketing where there are simply not enough experts to go around.
Outsourcing Pros and Cons
Outsourcing is simply when company contracts with a vendor which provides its skills, expertise, technology, services and staff to perform functions the company has decided not to do in-house.
Offshore outsourcing, which involves hiring an overseas vendor, is often politicized as a hot-button issue, but it has nonetheless become an increasingly attractive option for US businesses for obvious cost-benefit reasons. Offshore employees get paid a fraction of the salaries in the U.S. and other developed countries, saving businesses a significant amount of money.
Besides the cost benefits, outsourcing can help businesses increase efficiencies and allow them to focus on their core competencies, innovation and creativity. It can also provide your company with the technical and executional expertise it might not otherwise have.
You can also more easily scale your workforce up and down, without worrying about hiring and firing, and operate with more flexibility, transparency and accountability.
There are, of course, challenges to working with an overseas vendor. They can be less accessible than an on-shore agency, different time zones can make scheduling calls a challenge, and there can be communication issues if your overseas staff has English as a second language.
These issues can be easily mitigated if you set up an onshore-offshore arrangement where a US-based firm manages your overseas operations for you. (Coincidentally, that’s what iSOCRATES does.) That way, you work with the onshore agency, and they handle everything with your offshore team.
How to Decide What Should be In-housed vs. Outsourced
A hybrid approach to sourcing allows you to get the best of both worlds. But how do you know which tasks your in-house agency should tackle and which should be outsourced?
Well, the obvious and best advice is don’t outsource what you excel at and what provides strategic advantage. You never want to outsource any of your business’ core competencies – it makes you too reliant on your vendors. And if you already have people in place that are great at performing certain media and marketing services, leave them alone to do it.
Instead, outsource functions where you lack expertise or lack agility. If no one on your team understands or can cost-effectively deliver data managment, programmatic media/planning/buying/selling, it might make more sense to outsource that work instead of trying to bring on full-time employees. Remember too, that you can always have an in-house person manage your vendor. You can create your programmatic strategy in-house, for example, but have an experienced, outsourced media buyer actually purchase the ads.
The benefits to a customized hybrid sourcing solution include:
- Add specific platform and process expertise
- Cut costs while maintaining quality
- Keep key strengths in-house
- Outsource projects or processes outside those strengths
- No need to invest in expensive applications/software/tech
- No need to hire or train employees for outsourced functions
- Greater flexibility, scalability and efficiency
- Maintain control and visibility where you need it
- Focus on key competencies
- Gain organizational agility
When you need help to determine the hybrid solution that best fits your business needs, we’d love to help. Contact us for a free consultation today.
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