Ideas + Opinions

In-housing or outsourcing? The correct answer may be a hybrid.

2020 was an in-housed year for many of us. But as digital transformation accelerated in a locked-down world, the in-housing vs outsourcing debate became even more complex. What’s required are hybrid solutions

In-housing or outsourcing? The correct answer may be a hybrid.

By Lei Sorvisto, Chief Marketing Officer, Hybrid Theory

2020 was an in-housed year for many of us. But as digital transformation accelerated in a locked-down world, the in-housing vs outsourcing debate became even more complex. What’s required are hybrid solutions.

Ever since lockdown hit and our jobs, our social lives and what remained of our offline shopping habits shifted online, the pace of digital transformation has accelerated dramatically for the vast majority of brands. As the world found new ways to integrate online, companies have had to scramble to do the same.

Under ordinary circumstances, such a massive swing to digital would be a natural cue for brands to push the button on long-debated in-housing decisions. After all, in-house was already the direction of travel in digital marketing, as marketers summoned media, data or creative operations under their own roof for the sake of efficiencies, transparency or better quality work.

But in-housing in a pandemic might feel like more of a gamble than usual. With the world in flux, fixed costs are unpopular, and adding to headcount feels all the more counterintuitive when offices sit empty and staff work from a million kitchen tables.

However, that doesn’t mean this isn’t the moment for some strategic in-housing. On the contrary, this may be the perfect time to tackle some of the many problems that afflict brands in the midst of digital transformation. All you need is the right help.

The truth about in-housing vs outsourcing

Speaking as a veteran of a number of major brand in-housing projects, the fact is that neither in-housing nor outsourcing is automatically better or worse, cheaper or more efficient – though any of these can be true.

In practice, everything depends on the brand, the challenges it faces, the nature of its market and its existing systems. And the debate is often finely balanced, which is why in-housing vs outsourcing is a debate that will ultimately rage for all time.

Don’t in-house just for the media savings

Among my past projects was to in-house online media – including paid search, social and programmatic advertising – for a global automotive brand. In the process, we cut our media costs by something like 30%. Then again, we doubled our team in order to do it. Meanwhile, we were also reducing paid media as a proportion of the mix, so we would probably have made similar savings if we’d done nothing.

The fact is, in-housing made sense for that brand for a host of reasons, from transparency to market credibility, but the numbers alone don’t quite capture it. Marketers shouldn’t just look at how much they are likely to save on media costs if they pull the process in-house. Instead, they should be looking for coherence between their channels.

Don’t build more than you really need

The idea of in-housing digital media and dispensing with retained agencies and opaque costs will always appeal, but a brand that runs a campaign once a year probably shouldn’t be building a team of 20 media traders.

Your specific problems may be more common than you think

Every brand has its own challenges, but it is also remarkable how often the same ad-tech pinch points strike, particularly when in-house systems butt up against outsourced ones. Retaining a ragbag of agencies and in-house teams across digital media often creates fragmentation between channels, where organic search doesn’t know what paid search is doing and CRM drives leads that are claimed by social. Do different agencies’ KPIs even fit into the same measurement framework? Often not.

Another common problem relates to end-to-end reporting frameworks that don’t join up. How many brands know exactly how many leads they generated through their Salesforce-driven CRM system but have no idea how many converted, because financial reporting is in a separate system from media?

Your traditional partners can’t necessarily help you with this.

There are many companies that will sell you an in-house solution or urge you to outsource to them. But what brands need is a partner that can serve both – to bring consultancy, proprietary technology, media trading, data expertise and audience segmentation, and to deploy as much or as little of them as is required. Companies that want to run their own media may need a data partner. Brands working on a technology project may need trained staff to parachute in for the project’s duration.

What we are offering is to ease up the digital transformation process and unpick some of its complexities. We have our own technology. We can add value to Google or Facebook targeting, but unlike network agencies we don’t have a huge cost base to carry, which makes us nimble and flexible.

We operate a hybrid model, and we are about collaboration. We are about joining up all these channels, through technology and through talent.