in house vs. agency

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The in-house versus agency debate is largely over because for 90% of businesses, it is no longer possible to run a significant (large budget/large volume) online marketing program without agency help.

Since I’m an online marketing agency CEO, it’d be fair of you to accuse me of bias and self-interest in making this statement, but please put away the rotten tomatoes until you have at least heard my argument. For what it’s worth, it’s an informed one; I spent eight years as an in-house SEM and used to hate agencies.

The argument is as follows:

Online marketing today is more complex and convoluted than it has ever been. As such, to conduct a robust and effective marketing campaign, a business needs lots of experts, lots of tools, and, well, lots of help. Only the very largest spenders can afford to maintain this army of experts internally, which leads to the need for outside help.

In this post, I’ll describe the layers of today’s online marketing landscape – and explain how your company can evaluate its needs and decide which kind of agency it might need to bring on.

The Five Vectors Of Online Marketing Complexity

As I see it, online marketing success requires execution on five vectors, which I’ll describe below. If you currently work for an in-house marketing team, how many of these vectors does your team handle on their own? My guess is that you do some of these well, some of them not as well as you’d like, and some of them not at all.

Vector #1: Multiple Marketing Channels

I was reared as an SEM expert, and I’d like to think I know a fair amount about this space. Of course, SEM is just one of many channels that make up online marketing today. The list includes:

  • SEM
  • SEO
  • Facebook PPC
  • Facebook Ad Exchange
  • Facebook (earned)
  • Twitter PPC
  • Twitter (earned)
  • LinkedIn
  • YouTube
  • Google Display Network
  • Ad Exchanges
  • Direct Media Buys
  • Email Marketing
  • Affiliate Marketing
  • Pinterest

Vector #2:  Big Data

Cookie-based data is great, but it is no longer the only data source that savvy online marketers are using to analyze results. Here are a few more that are gaining a lot of traction:

  • In-store data
  • Digital fingerprinting
  • View-through incrementality and attribution
  • Cross-device interaction
  • Database-driven offline conversions
  • Lifetime value

Vector #3: Tools

If you enjoy product demos of technology, online marketing is a great space to be in right now. The display landscape has dozens of tools, and the search world isn’t too far behind. Among the many tools that online marketers must evaluate today are:

  • SEM campaign management software
  • DSPs
  • Ad serving
  • Attribution
  • Tag management
  • Creative optimization
  • Reporting
  • Facebook optimization
  • Analytics
  • Call tracking
  • SEO platforms

Vector #4: Devices

Desktops are no longer the only game in town. Just a few of the fun devices that we need to create optimized funnels and ads for these days include:

  • Desktops
  • Tablets
  • Smartphones
  • Feature phones
  • Internet-enabled TVs
  • Google Glass (well, maybe someday)

Vector #5: Geography

Technology has made the world flat, enabling small companies to build a global footprint faster and easier than any other time in history. But with international expansion comes additional challenges, like:

  • Ad copy and landing page localization
  • New marketing channels (think Baidu, Yandex, and Naver, for example)
  • Different time zones to manage (want to stay up 24/7?)
  • Different laws and regulations

The In-House Solution: Now, Discover Your Strengths!

A jack of all trades is a master of none. This adage applies equally to both ad agencies and in-house teams. Any agency that promises you that they can handle the 40 or so challenges elucidated above is selling you a bill of goods; it is simply not possible to be an expert at all things marketing.

Similarly, unless you work at Amazon or eBay and have an enterprise level online marketing team of 50 or more people, it’s unlikely that you can really handle all of these challenges on your own.

As such, to master online marketing, you need to find outside help, which almost always means a combination of technology providers, agencies, and consultants. So the question is not “whether” you need an agency, it’s “which” do you need? To keep with the “vector” theme, I have four more vectors through which to evaluate an in-house team’s agency needs.

Vector #1: Your Company’s Core Competencies

Amazon decided that fulfillment was core to their business, so they kept it in-house. Zappos values customer service and keeps that as an internal function. What does your business value? Are you a tech-driven company? If so, perhaps your data analysis and tools selection should be managed internally, but your marketing should be outsourced.

If you are content-driven, keep earned media internally; whereas, a direct-response marketing shop might want to keep paid media inside its walls. In sum, craft your in-house marketing team to mimic the core strengths of the company and consider outsourcing the tasks that aren’t.

Vector #2: Your Marketing Team’s Expertise

Malcolm Gladwell popularized the concept that to become an expert, a person needs 10,000 hours of experience. Expecting your team of very-smart, but inexperienced, marketers to handle new channels with aplomb is like expecting them to learn to fly a commercial airliner after a few lessons.

Google, in particular, has worked hard to convince marketers that AdWords is easy to start and easy to manage (“start with just $5!”). AdWords – and every other online marketing channel, tool, and task – are all complex. Agencies offer “for rent” expertise in areas where your hiring budget for experts falls short.

Vector #3: Cost-Benefit Analysis

Believe it or not, there are times when working with an agency is cheaper than keeping everything in-house. For example, agencies can negotiate technology deals across all of their clients at a rate that is much more affordable than what you could negotiate for your individual company. And sometimes, hiring an agency to handle a few marketing challenges is outright cheaper than bringing on full-time employees to do the same tasks.

Vector #4: Does It Matter?

To be clear, I am not making the argument that online marketing success can only be achieved by implementing all 40 of the points described above. Indeed, many of these points are likely totally irrelevant to your business. And many of these might be “nice-to-haves” but not vital to your success.

So, just because you could create a mobile-ready micro-site in 25 languages and run a StumbleUpon campaign to drive visitors to the site doesn’t mean you should! Many agencies are more than happy to sell you something that wins them a shiny award but does nothing for your bottom line.

Are You Convinced Or Am I A Shill?

As I said earlier, I worked in in-house marketing for eight years prior to founding an online marketing agency. In general, I hated agencies when I was on the in-house side. But, when I left in-house for the agency dark-side in 2008, it was still more or less possible to manage all things online marketing in-house with just a few people.

Fast forward to today, and the marketing world is exponentially more complicated than it was then (just look at how much more complex Google AdWords is today than it was in 2008, for example). New devices, new channels, new technology, more data and more geographies – this is no longer a task that a few smart folks can handle on their own. So, pick your battles to fight internally and pick up the phone to find great outsiders to help you fight everything else if you need additional resources.

Let the rotten-tomato throwing commence!

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Enterprise SEM

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About The Author: is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including Rentals.com (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up.

Connect with the author via: Email | Twitter | Google+ | LinkedIn



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  • Durk Price

    Great post on the value of agency relationships. I encounter these issues every day from clients that believe they can do it better, faster, cheaper. Still, we win our fair share. Thanks for expressing the realities of the complexities of the online marketing world.

  • http://twitter.com/Kevin_Lee_QED Kevin Lee

    All of the above makes sense. There’s also a strong argument to be made with regard to specialization related to cost of the person (internally or as part of an agency). A seasoned pro can do everything in a campaign, but is that the best use of their time given their salary level and the opportunity cost of what else they could have been doing? Also, agencies can more effectively handle seasonable spikes in workload than an internal team because their talent pool is larger and more specialized (at least at my agency). .

  • reid

    I would add redundancy to the list, as well. If your company can’t afford to hire at least 2 people to do SEM/Social/whatever, you should outsource. What happens if your one employee wants to take vacation? Or, worse, quits? Will you be able to replace that person and have a proper knowledge transfer in two weeks? It’s just safer to hire an agency if you can’t afford to build a team.

  • Pat Grady

    Why did you hate agencies when you were on the inside?

  • http://www.facebook.com/gohawks David Rodnitzky

    Because I felt like they were lazy and not interested in client success! I still believe that many agencies fall into this camp, but I’ve learned that there are some good apples out there.

  • http://www.facebook.com/gohawks David Rodnitzky

    No disrespect taken. The paragraph in italics at the top of the article is a good summary of the point, btw.

  • http://www.facebook.com/gohawks David Rodnitzky

    Great point Reid. The job market is hot right now and its hard to keep SEM folks happy for too long it seems . . .

  • http://www.facebook.com/gohawks David Rodnitzky

    Yep, another point to support the thesis. Thanks Kevin!

  • http://www.facebook.com/gohawks David Rodnitzky

    Thanks Durk. There are some great in-house teams that can do it all faster and cheaper, but it gets harder and harder to do so as the complexity of online marketing increases every day!

  • Itai Levitan

    IMHO, David Rodnitzky is one of the wisest guys in the global SEM industry. Thank you for a very intelligent article.

 

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