Know-How Exchange : Advertising/PR

Hi Allison,
I can touch on the Inhouse vs outsourcing debate. It is similar to the “centralize or decentralize” debate. The answers are varied, and really depends on the organization’s strengths, size, and preference.

The ideal situation to keep marketing inhouse would be the following scenario. The organization has a highly skilled, efficient, close knit in house staff. The staff is relatively small in number without any redundancies. The staff is also skilled in working with qualified vendors when projects get too big, or are out of their area of expertise.

Keeping a small number of qualified experts in house is best for everyone, because their expertise will keep vendors honest about their quality and rates. Without the inhouse experts, you are at the mercy of vendors. It also improves moral among the company when they feel their company is important and committed enough to have inhouse experts.

That said, if an organization’s marketing staff is oversized, with redundancies, has staff who are unmotivated, unskilled, do not get along well, and inefficient; then it is time to outsource. There is no reason to keep a weak team.

The last category “preference” deals with how the overall industry and market feels about outsourcing. This is a fad that comes and goes. Although regrettably, it has a strong effect on how the C level positions feel about keeping staff or outsourcing. There was a time when most companies had inhouse staff. Then there were times when they got rid of staff and outsourced. Then there was a time when they hired inhouse staff again. Whatever the CEO of the other companies did, the CEO of X company also did. Try not to let this affect your decision as you do your investigations.

The fad right now appears to have a small staff to oversee the vendors who do the actual work. For an org with leading edge new media campaigns, this is a must, as no inhouse staff can tackle the different technologies available. Another fad is to have multiple vendors for the same type of work, such as having two different vendors do direct mail campaigns.

Great answer by ngoct on inhouse/outsource. The only thing i would add is to run some hard numbers/ financials to compare each.

You already know the "current state" which is the cost of your existing in-house staff (remember to cost out employees fully loaded - with all benefits and overheads applied, since this is how external agency labor is calculated - you want to be apples-to-apples). Compare this to what it would cost to have an agency plan your campaigns (see next paragraph).

Although few agencies use a commission structure anymore, you would still want to add that cost for the media purchasing at least. Then, focus on the agency labor cost - number of people times hours times an hourly rate (for the latter, use what is standard in your market). The variables for number of people and number of hours will be up to your judgement, but typically you will find it is more people than you have on staff, but jobs can be knocked off in fewer hours.

As to your organizational question, you didn't describe what the matrix is so I can only illustrate with an example. Let's say for this example the matrix is function and BUSINESS UNIT (BU). Although a few companies have been successful in decentralizing marketing to the BUs, it comes with more problems and challenges than you might wish to manage in a large, complex organization, ESPECIALLY when considering your very specific situation of being an in-house agency.

The better structure is to keep the agency centralized (perhaps under "Corporate Marketing") and ALIGN the unit against the various BUs. In this case, there is a specific individual(s) working with an assigned BU and therefore the BU can call on ONE person for assistance. In this case, control is centralized, which is better for budgeting, brand consistency, style guideline adherence, etc.

I could go on forever with this, but due to the nature of this forum I will stop here, hoping you get my drift. If you need more direction, please contact me.