Blog post

Marketers Evaluate Their Hybrid Agency Ecosystem

By Sally Witzky | April 30, 2021 | 2 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

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2 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.