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The Notion Of In-Housing

Opinion

The Notion Of In-Housing

By Mohamed Itani

Let’s face it, some of you must have thought of or desired at some stage to manage your media in-house. Well, if you go by the saying “if you want something done right, do it yourself” then you must have actually gone beyond the simple thought of in-housing. Well, it also appears the universe is conspiring in your favor lately, digital is picking up to become the core communication platform, technology on steroids has made trading media accessible to every party in the value chain, and your own data finally has shown its potential. Add to this, the shrinking marketing budgets due to current market conditions, data ownership, control and transparency – it might be just the right time to address the notion of ‘In-housing’ media. 

Digital Media represents an estimated 40 per cent of total media spending across MENA in 2019. This is a considerable uplift for what is considered to be a “branding “dominated region. Advancements in technology, data, and automation across all consumer touchpoints is forcing the entire ecosystem to constantly adapt and plan with agility. E-commerce is on the rise, CPG and FMCG companies are taking some serious steps towards online retailing and major telco’s are becoming more data-driven. These factors will only speed the conversion of media budgets towards digital. 

There have been some brave steps in a couple of global markets such as North America, UK, and Germany to either partially or fully in-house their media activities, while we are yet to witness some similar attempts in MENA. However, before we deep-dive into its various models, strategies, and processes, let’s first dissect and evaluate the opportunities and pitfalls of in-housing. 

 Demystifying the myths behind in-housing:

  1. It’s one size fits all: 

The trend of in-housing the media assignment started with e-commerce and nimble online start-ups which are heavily focused on performance and direct response. These types of companies exist online and their first outgoing and incoming transaction is online. Prior to social, programmatic and real-time marketing, they would spend 80 per cent to 90 per cent of their marketing budget on search (programmatic in nature) and affiliate marketing. They don’t and really can’t afford to go by the theory “Half the money I spend on advertising is wasted; the trouble is I don’t know which half”. They are born and raised to know exactly the return of every single dollar they spend on media. Furthermore, the first $1 decides on how the second $1 will be spent. In-housing isn’t a choice but it is second nature. If you are a heavy branding type of advertiser with little online retailing experience and exposure, then you need to rethink in-housing and approach it with caution. Remember, you are talking about disrupting the way you’ve been operating for what can be decades of a successful model of delivering marketing assignments. Still, global companies such as Procter & Gamble, Bayer, and Sprint either partially or fully in-housed media. Others such as Vodafone is attempting to in-house but recently backtracked on in-housing programmatic. It’s definitely not a one size fits all and it doesn’t give the same results to all advertisers alike. 

  1. It’s about hiring different skillsets to form a team

Finding talent is one problem, retaining them is another. Assuming that C level and relevant stakeholders are sold on the merits of in-housing, there should be a clear mandate on the purpose, objectives and goals of hiring a team which can be anywhere between 5 to 20 digital team structured within your organization. You should also consider how are you to blend in this team with the brand, marketing, sales, research and finance teams. In reality, the whole organization from top to bottom must understand, validate and sign on the mission you are about to embark into. 

Prior to developing your hiring strategy, you should seriously address the technologies and respective contracts with the vendors. One of the pitfalls you should avoid is to incur the cost of a team without giving them the tools to operate on. Any typical organization, depending on the sophistication of its adtech requirements, will need between 2 to 5 months to onboard DSP, DMP, and other automated planning and optimization tools.

Truth to be said about digital talents that their safe haven are media agencies. Media agencies give the opportunity to experience a diversified portfolio of clients across multiple industries. It’s very rare to find a digital talent without any agency background. They have to buy in to your vision, believe in your approach and their career path within your organization. With shortage of such talents, never underestimate the hiring process. Many of the advertisers who have taken the in-housing route are suffering from hiring talents. Therefore, you must have something strong enough on the table to fulfill their career desires.

  1. I can be as good as my Media Agency if not better

Yes and No. When in crisis as a result of your media agency under-delivering, you might be right to say you can be as good as them, if not better. But in most situations, that’s not the case. You might recall from the last time you put your media assignment on pitch – the amount of tools and team structures that were needed as dedicated to your business. Research, planning, competitive studies, market intelligence and many other tools which agencies offer and in most cases for free should not to be taken for granted. Such tools offer the client a bespoke strategy and communication plan supported by science and math. If an advertiser is to embark on in-housing the process, it would take them years of experience and investment. Media Agencies live on the premise of facilitating this on their behalf.

Support structure is another aspect you should consider. Yes, a lot of names and positions are presented during the pitch and you sometimes wonder why they are not in every campaign briefing session. You start to wonder if they really exist. Functions such as Investment, Strategy, Data Science and Research all work behind the scenes to service your business. While in most cases, they are not part of your core structure – they actually have a huge impact.  

  1. In-housing always results in cost cutting

If cost cutting is the purpose of in-housing then you’re starting on the wrong foot and maybe you should take a moment or two re-evaluate your options. It’s true that in-housing helps advertisers be in total control of their media activities and data approach, however cutting costs especially on the short term is not one of them. On the contrary, you will need to consider hiring the team (which will add to the overhead costs), tech fees, research and planning tools, and more hidden costs of which in most cases will have a significant impact on your P&L especially during the initial years of operation. It boils down to a simple equation of calculating your agency fees and the value they add to the table against the cost of replicating the same cost model in-house while taking into consideration two factors – what are you willing to give up and at what cost.

Mohamed Itani is the Regional Executive Director, Digital at MCN Mediabrands. 

Opinions expressed in this piece belongs to the author.

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