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 most notably Bayer and P&G have moved the bulk of their digital/MADTech media and marketing operations in-house over the fast few years , most businesses have determined that a hybrid solution one that makes the most of in-house and outsourced expertise maximizes results while delivering the best value.
Such hybrid solutions will differ from firm to firm. They will play to the company’s strengths while enlisting professional onshore or offshore specialists to handle functions where the business itself lacks 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 a 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 MADTech marketing. MADTech marketing accounts for more than 80% of the digital ad spend nationally. Yet a study by Advertiser Perceptions reported that advertisers with MADTech 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 MADTech media. It’s not a big surprise then that two out of three marketers plan to bring their MADTech efforts in-house by 2022.
While moving your MADTech media and marketing functions in-house has the potential to give you more control, visibility and data privacy, that move does come with many challenges.
The ANA study mentioned earlier 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 you need to be a very high level of commitment.
Talent engagement and acquisition is also a huge issue especially in the relatively new specialty of MADTech marketing where there are simply not enough experts to go around.
Outsourcing Pros and Cons
Outsourcing is when a company contracts with a vendor to provide skills, expertise, technology, services and staff to perform functions the company has decided need not to handle in-house.
Offshore outsourcing – hiring an overseas vendor, is often politicized, 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 of their counterparts in U.S. and other developed countries, which saves 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 be able to find or afford.
You can also more easily scale your workforce up and down without worrying about hiring and firing and operate with greater 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 English is not your overseas staff’s first 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 your 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 to not outsource activities at which you excel or those that provide you a strategic advantage. You never want to outsource any of your business’ core competencies; it makes you too reliant on your vendors. If you already have people in place who are great at performing certain media and marketing services, leave them to it.
Instead, outsource functions where you lack expertise or agility. If no one on your team understands or can cost-effectively deliver data management, or MADTech media planning, buying and selling, for example, it might make sense to outsource that work, rather than bringing in additional full-time employees.
Remember, you can always have an in-house person manage your vendor. You can create your MADTech 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 or 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
If you need assistance in determining 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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