The Ad Agency Model Is Crumbling

Traditionally, if you needed help with marketing or some new ideas, you’d hire an ad agency. They had the resources, the talent and the connections to deliver a creative marketing program that would solve your problem and grow your sales.

Advertising and marketing, however, have undergone major changes in recent years. The more progressive consumer companies (those outside of building materials) are moving away from the ad agency model and bringing the whole process in-house.

Internal agencies have been on the rise over the last decade, but there’s been a change along the way. The first jump happened during the 2008 recession, when many companies started relying on internal teams to handle their marketing as a way of reining in costs. With budgets getting leaner, hiring an external ad agency became a luxury that businesses could no longer afford.

Now that the economy has recovered, however, companies that brought their marketing in-house have discovered that working with their internal team isn’t just cheaper – it can be better. An in-house team is often much more responsive, innovative and effective than an external agency.

As this article points out, 50% more advertisers are relying on in-house agencies.

Why You Should Bring Your Ad Agency In-House

The trend is moving in the direction of the in-house agency, but some companies are still relying on the traditional agency model. This is especially so in industries that have been slower to innovate, like building materials.

If you’re still relying on an external agency to handle your marketing, it’s time to consider bringing some of it in-house.

Not convinced? Here are seven benefits you can get from creating your own ad team.

1. Lower Cost

When you outsource work, it’s often to get it done cheaper. Advertising is the exception. Working with an ad agency is usually more expensive than putting together your own team.

Ad agency fees usually include heavy overhead costs that are passed on to you, which can inflate the price of your marketing campaigns. The cost of working with an internal team depends on the kind of talent you draw and the size of your marketing department, but it generally costs somewhere between $50 to $175 per hour including overhead as this Wall Street Journal article points out.

Agencies also need to keep driving up their billings to make their owners happy. To do that, they need to constantly find new services, ideas and projects to sell you. Their internal measure of success is how much they sell you each year and how much it’s growing. The measure of success with an agency is rarely that they made your sales grow, only that they grew theirs.

With an in-house team, however, your sales growth is the only measure that matters. That means all the resources you put into it can go directly to improving your marketing efforts.

2. In-House Teams Can Be Quick and Nimble

Digital advertising works at an incredibly fast pace.

Not only do you want to keep rolling out communications that reflect your messaging, but you want to be able to jump on things that are popular and trending with your customers before they become old news.

The most effective marketers today are those who make changes to their online marketing on a daily or even hourly basis. If a customer announces something online, they are ready to like, share or comment on it immediately. If there is a news article about their product type, they are commenting or responding to it quickly.

If an email or online ad campaign is not getting the response they want, they can change it within a few hours.

But working at this pace is almost impossible when working with an outside agency.

In-house teams can move a lot more quickly. The streamlined approval process means they can get a fast turnaround on almost any kind of initiative. They can respond to anything that is happening online as soon as it gets on their radar.

And that kind of speed works. When you see a company trending or creating buzz because of its online activity, it’s almost never something that was planned and executed over the course of weeks or months. It’s something that happens almost on the fly. It happens when you have creative and dedicated people who are closely monitoring your digital presence and ready to post the right thing at just the right time.

Many agencies like to work with an annual plan and budget and then they spend the next 12 months executing it and billing you. They’re so focused on making money on the execution, they ignore ongoing changes in the marketplace and will stay the course even when their plans are no longer effective because of these changes.

3. Deep Knowledge of Your Products and Customers

When you work with an agency, you’re one account out of many. They’ll do their research, of course, but there may be no one who is focusing solely and exclusively on your company, your industry and the people you’re selling to.

When you build an in-house team, you create a small ad agency that has only one client: you. Their entire time is dedicated to learning what you do, how your industry works and who your customers are.

Effective advertising starts with knowing what you’re selling, who you’re selling it to and what your customers care about. An ad agency will never understand those things as deeply as your dedicated, in-house ad team can.

4. Continual Engagement

Ad agencies work on a traditional campaign model. Their approach to marketing is practically to run a campaign for a set amount of time and then go back to the drawing board to come up with something new for the next run.

That model makes sense for traditional media like trade ads, but it doesn’t reflect the way digital advertising functions. Digital advertising is responsive and real-time. You wouldn’t want to spend too much time delivering the same kind of content over and over.

Today’s marketing needs to be continuous and evolving, so it makes sense to get an in-house team that works for you non-stop. No contracts, terms, or campaigns – just ongoing engagement with your customers and prospects.

5. Thinking Outside the Ad Box

Unsurprisingly, ad agencies cling to executing the kinds of tactics they’re used to. Even as social media marketing and content marketing are proving to be effective and cost-efficient modes of advertising, agencies are more comfortable staying with what they know.

It’s to be expected. It’s what these established agencies have done for decades. It’s what they built their reputations on. It’s what they do best – but it’s not necessarily what’s best for you.

Most ad agencies have completely ignored social media, content and digital marketing (except for designing websites). They will say they’re experts at digital marketing, but you will rarely find them doing these things for themselves.

If they’re running a digital campaign for you, they still tend to be ad-centric and it often amounts to little more than practically copy/pasting their ad campaign into the social space.

You need a digital marketing strategy that is more than just uploading your main ad campaign to your digital channels. That’s where your in-house team can be a real asset. They tend to be less married to traditional methods and are willing to be more innovative with your digital advertising. They’ll take an organic approach to online media that involves creating content or building mini-campaigns tailor-made for different digital channels and types of customers.

6. Creating a More Direct Relationship with Your Customers

Working with an ad agency can be like shouting into a megaphone. You’re targeting wide, with big campaigns aimed at reaching just about anyone and everyone.

The megaphone doesn’t make that much sense anymore. Communicating to every homebuilder or architect is no longer an effective way to reach them.

Most customers prefer engaging with brands in a much more intimate way, and this is an incredible opportunity for you. You can reach your more engaged customers and leads with carefully crafted content that speaks directly to them.

Your customers aren’t just seeing your messages, they’re following you online and engaging with you. With so much direct engagement, it doesn’t make sense to trust someone else to manage these relationships.

7. Attracting the Real Top Talent

Ad agencies used to capture the best talent in the business and many companies work with them on the assumption that they’ll be working with the best people. But that’s no longer the case.

Ad agencies are no longer automatically considered cool or desirable places to work. They’ve lost their mojo. Agencies now have to compete for talented people just like other businesses.

Digital communication requires a whole new set of skills, and the people who have them don’t need to work for an agency to use them.

Some young people who are looking for an impressive line on their resumes are still determined to work for an ad agency. But creative, smart, passionate people who want to invent, be challenged and have a lot of room to grow their skills are increasingly gravitating toward in-house or freelance positions.

So, don’t be fooled into thinking that ad agencies have the top talent. The most successful social media marketers or the most outside-the-box content creators might be more willing to work with you directly.

Not for Everyone

If you want a successful in-house agency, you need to understand how a good agency works. If you’re a smaller company and you haven’t worked with an agency, you should work with an external one before considering whether going in-house is right for you.

If you are only looking at the potential cost savings, this is also the wrong choice for you. I see many companies that really don’t understand marketing hire some people and call it a marketing department. At best, they hire an in-house artist and a purchaser of creative services. This is not an in-house agency or even a real marketing department.

If your culture isn’t ready for an in-house team, creating one is a mistake. Good marketing and creative people can be very different than your typical employee. Instead of them feeling fortunate to have a job working for you, you need to have the attitude that you’re lucky to have them working for you.

When you get some of the best people, you have to assume that they will probably leave you at some point. And it’s less likely to be for more money than for new challenges or opportunities to grow. When you get these talented people on your team, you have to be committed to keeping them interested in staying with you.

Your culture also needs to accept, expect and demand alternative thinking. Too many in-house agencies are told what to do by the VP of Sales or the CEO. Do not give them tasks – give them problems and ask for their solutions. Expect that many of their solutions are going to be different than the one you would have recommended.

Start Building Your Team Now

Technology and the internet have made the tools of advertising more accessible than they ever were. Online is the new dominant ad platform, and there’s no reason your in-house team can’t master them just as well as or better than an ad agency can.

So, when you start thinking of your plan for the next year, take a long, hard look at your ad agency. Are they delivering the quality and results you expect them to? Are you getting a lot of returns on every dollar you send them or do their fees seem a bit bloated? Are they helping you engage directly with your customers or is relying on them building a wall between you and your followers?

Are they doing anything that a small, dedicated team of talented professionals couldn’t do better?

When you answer those questions, you’ll probably see that it’s time to part ways with your external agency. For many companies, bringing advertising in-house is the right choice: it’s cheaper, more convenient and much more effective.

And you don’t have to worry about what kind of talent you’ll miss out on by not hiring an ad agency. Even the best in-house agencies use outside specialists for their expertise.

In Closing

There a number of very good client/agency relationships in building materials. These are the ones where the agency doesn’t just do what they’re told. If your agency relationship looks like this:

You: We need a new website. Agency: What’s your budget?

it’s time to find someone else to handle your marketing.

You have a better relationship if the discussion looks more like this:

You: We need a new website. Agency: Why? What do you hope to accomplish with it? And is there a better way to reach those goals?

Even better is when you come to them with something close to this: “We have a problem/project/challenge we want you to think about and give us your recommended solution.”

If you have one of these relationships, I recommend keeping it and working to make it even better.

But even if you do have a great relationship with your agency, there are a few areas that should be in-house. Developing or managing content for your blog and other platforms and managing your social media are two of them. Neither of these should be treated as after-thoughts. They’re much more valuable than most building materials companies realize. They are not simple tasks that can just be added onto someone’s job. They require a dedicated amount of time and maybe even some dedicated people.

You should also evaluate everything you use your agency for and assess where they are really strong. Here’s a compilation of the services agencies list on their websites. No one can be strong in all of these:

Analytics – Blogs – Branding – Broadcast (TV/Radio) – Content Marketing – Creative – Digital – Direct Marketing – Direct Mail – Display Banners – Earned Media – Email Marketing – Event Promotion – Exhibit Design – Graphic Design – Integrated Campaign – Internal Communications – Lead Generation – Logo Design – Marketing Automation – Market Research – Marketing – Media Planning + Buying – Media Relations – Mobile – Out-Of-Home – Package Design – Paid Search – Pay Per Click – Point of Sale – Positioning – Product Reviews – Programmatic – Promotions – Public Relations – Retargeting – Sales Meetings – Sales Presentations – Samples – SEO – Social Media – Strategy – Trade Advertising – Trade Shows – Video Production – Websites

In areas where they are weaker, look at moving that part of your marketing to another firm that specializes in that area. Don’t let your agency handle your marketing automation, SEO, or content marketing if another firm could do a much better job with them.

Before you bring everything in-house, think it over carefully. The benefits can be great, but most building materials companies are not ready for the commitment it takes to set up and manage an in-house agency correctly.

The building materials industry is a number of years behind the rest of the marketing world, so it’s nice to see what’s coming. And judging from other industries, in-house agencies are about to boom.

It’s like when I lived in Ohio and watched what was happening in California: I knew what clothing and hairstyle I would have in a few years.

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