Blog post

Marketers Evaluate Their Hybrid Agency Ecosystem

By Sally Witzky | April 30, 2021 | 4 Comments

Digital MarketingMarketing Organization and Talent

Marketers are in no way, shape or form abandoning their agencies. Nor are they moving all work to in-house agency teams. But the tumultuous year of 2020 reveals new opportunities for clients and their agencies as evident by Gartner’s 2021 Magic Quadrant for Digital Marketing Agencies.

So what ARE marketers doing?

As a result of looking for improved opportunities to balance and optimize their agency ecosystem, marketers are:

  1. Actively evaluating their entire agency ecosystem to improve and prioritize the alignment of the marketing work to business goals. Marketers must ensure the right resources are assigned to the deliver the most effective business outcomes at scale.
  2. Ensuring that the resources can help them flex as the market shifts. Marketers know the market can and will shift at any moment. They cannot afford to miss revenue opportunities. Nor can they appear tone deaf to an important cultural shift that hit the news that morning.
  3. Securing fiscal accountability by efficiently and effectively managing all internal and external marketing resources. In the last year, many marketers lost budgets and headcount. They have led teams through a reorganization or consolidation.  Marketers may need to redesign the marketing organization to allow for business shifts such as a renewed emphasis on digital commerce and personalization.
Marketers Must Make Decisions on Best Agency Resource

First, marketers must decide what work should be insourced and what should be outsourced. To help with those decisions, below is list of decision-making guardrails to insourcing vs. outsourcing:

Gartner for Marketers Guide to Insourcing and Outsourcing
Trying to decide what type of work to send to your in-house agency and what to send to your external agency? Use these guardrails to help you evaluate.

 

Marketers Build Case for In-House Agency

Marketers are also making the case for their in-house agency or they are expanding its capabilities. As mentioned in Making the Case for Your In-House Agency (Parts 1 & 2), Gartner recommends the following:

  • Create an in-house agency plan detailing the type of marketing work that should be insourced and outsourced
  • Define the scale and scope of the in-house agency by considering the extent of work currently being done internally. 
  • Clarify the tangible benefits that your in-house agency will provide to the marketing organization and your internal clients. Tap Gartner research to help explain why those benefits are critical to your business and how they can provide you with tools and frameworks to advance your in-house agency’s overall competency.
  • Factor in ways to justify and recover costs and include comparisons to external agency fees for similar projects when making a pitch for your in-house agency.
  • Create a list of expense categories to include costs such as technology and training.
  • Determine the best in-house agency strategy for now and the future, ranging from cost center to profit center.
  • Work with your CFO or financial manager to draft a cost proforma to start new or to extend your current in-house agency. However, cost optimization is not the only benefit as many marketers start in-house agencies for reasons beyond cost.
Justify In-House Agency Benefits Beyond Cost Optimization

Aside from cost efficiencies, rationalize your in-house agency investment with valuable benefits. These will lead to a more complete business case and substantive argument. Justify in-house agencies based on a range of benefits that external agencies might find tougher to develop as strengths:

  • Built-in knowledge of company, culture, customers, brands, products and services.
  • Deeper collaboration capabilities with internal clients and external service providers including marketing and media agencies, martech vendors and data providers.
  • Increased control and faster-decision making without unnecessary over-reliance on external service partners, especially for customer data, insights and campaign results.
  • Operational efficiency and effectiveness with streamlined logistics, workflow automation and agility.
  • Accelerated customer response times to feedback and to act on customer insights, especially with quick mediums like social and digital channels.
  • Improved adherence to guidelines for brand style and regulatory compliance to ensure consistency and to reduce brand reputation and regulatory risks.
  • Enhanced in-house innovation and a test and learn culture since the in-house agency often has a unique vantage point working with many executives and leaders.

 

Recommended Reading (Gartner for Marketers Seat Required)

Making Sense of the Marketing Service Provider Landscape – From Agencies to Freelancers

Gartner’s Guide to Maximizing Your Agency Relationships

How to Maximize the Value of Small to Mid-Size Agencies

Survey Analysis: CMOs Forge New Relationships with Agencies

Leave a Comment

4 Comments

  • You said, “First, marketers must decide what work should be insourced and what should be outsourced.”

    Having addressed this issue within several IT vendor marketing organizations over the last two decades, I can tell you it’s a very complex challenge that’s more about people skills and experience than any other topic. Practical experience matters.

    As an example, while it’s true that semi-skilled project or program manager types at IT vendors can write a Brief and outsource work to an agency. Those same people are unlikely to be able to develop and author substantive content on their own that’s based upon a comprehensive (researched) assessment.

    Therefore, in-house agency teams must be staffed with skilled marketing practitioners who are capable of ‘doing the work’. Otherwise, the only ‘content strategy’ discussion that typically occurs is focused on how to spend the available budget during the current quarter (on contractors or external agencies).

    Also, a marketing leader with a legacy media-buyer mindset tends to create a work environment where everything is about the brand (no place for creative customer-centered narratives).

    • Sally Witzky says:

      Thank you for your comment, David. Yes, I would agree with your assessment. The research notes for “Making the Case” don’t go into detail on talent type, capabilities and in-house agency optimization. Those topics will be brought forth in future notes. We have a couple of existing published research notes on in-house agency talent and optimization which require refreshes/updates so we’ll do our best to specify.

  • Dan Young says:

    There’s a clear bias towards in-house agency strategies throughout this article. Where is the justification or substantiation of the claims made? For example, an organisation may have a sustained need for a specialist resource but that resource is not necessarily required on a full time basis. I also take issue with the argument that internal resources lead to fast decision making. In my experience the objectivity that external providers offer is a very effective way for client orgs to shortcut decisions that might otherwise get stuck in internal bureaucracy. And yes, I am on the agency side.

    • Sally Witzky says:

      Hi Dan – Thank you for your comment and feedback. First, if you ever have concerns about bias in our research, you can take them up with our Ombudsman (the link is here: https://www.gartner.com/en/about/ombuds).
      To address your concerns, the blog post is a very short extract of a two-part research note that I recently published on “making the case for your in-house agency.” The whole idea is that if you’re thinking of insourcing, make the case for it first and weigh benefits against risks before you start, and to proceed cautiously. In the first line of both the post and the research note’s analysis section, it references our Magic Quadrant for global digital agencies for which we publish annually. We take many client inquiry calls on both topics (hiring or managing agencies and for how to build in-house teams, as well as the hybrid model of using both strategically and together, which is most common). The “making the case” research note, published in two parts due to overall length, cites many primary and secondary research sources. I also took great care in adding “proceed with caution” paragraphs and relevant quotes to the research. Primary research cited includes our 2020 CMO Spend Survey and our more recent 2021 Digital Marketing Survey. Secondary research includes a number of sources including the WFA, the ANA, the Drum, Digiday, Adweek, Deadline, Medium, HBR, BusinessInsider, MarketingWeek and the IHAF. In addition, multiple Gartner for Marketing practice published research notes were also weaved in. The vetting process of our research goes through several peer reviews (4 in this case) plus leadership review and approvals. Since the article was published, the ANA held their In-House Agency conference and there were a few articles about that including this one: In-House Agencies Surged During the Pandemic but Will the Momentum Continue. We also have several additional research notes on in-housing that were published previously and will be refreshed. And I personally take calls from clients about in-housing and the balance (what to insource and what to outsource, and how best to make those decisions). To your specific question about fast decision-making benefit, sometimes that’s simply a matter of proximity and logistics, even if in our virtual world. However, to your point, one of my previous notes talked about the client-to-client “risk” for in-house agency teams which is very different than the client-to-agency relationship (the caution and advice around this came from one of Gartner’s CMO panels). So there’s depth and breadth of thinking and research here. Our goal is not to advocate one way or the other but to help our clients solve their mission critical priorities and most pressing needs which may be around agility, cost-optimization, reducing such high dependence on agencies, increasing efficiency and effectiveness (which can be achieved by optimizing all agency resources/talent), etc. Trust this addresses your concerns. Thanks again for your comments. (P.S. I have been on both client and agency side throughout my career, hired and managed agencies, served a multitude of clients/industries, and also built an in-house agency before coming to Gartner. I have had hundreds of client interactions with CMOs and marketing executives since.)