Marketing Math Blog

Haven’t We Seen This Picture Before?

By Advertisers, Digital Media, Media, Media Transparency, OTT, Programmatic Buying, Working Media No Comments

MovieAs you are likely aware, over-the-top (OTT) television expenditures are rising incredibly fast. According to Magna Global, OTT grew at a rate of 39% this year with advertisers spending $3.2 billion in this sector of the TV marketplace. Further, Magna is projecting spend levels of $5.0 billion in 2020.

As consumer demand for viewing video content via the internet on devices such as smart TVs, gaming consoles, laptops, tablets and smart phones continues to escalate, advertisers are jumping at the opportunity to reach these so called “cord cutters.” However, while advertising demand is strong the supply of OTT impressions or inventory is limited.

This scenario has created an opportunity for fraudsters that attempt to fool advertisers into buying OTT inventory that doesn’t actually exist. eMarketer estimated that in 2018 fully 1 out of 5 OTT impressions were invalid due to “a combination of fraud and ad serving measurement errors.” Compounding this issue is the fact that approximately 40% of OTT ad impressions are served via server-side ad insertion (source: AdLedger, 2019) thus rendering traditional fraud detection services, which rely on Java script, ineffective.

One cannot help but view this scenario and its similarities to the challenges and risks associated with programmatic digital media and real-time bidding. Sadly, the ad industry’s demonstrated willingness to latch on to “shiny new objects” comes with real risks and at a significant cost. Worse, once the proverbial genie is out of the bottle, the industry has demonstrated an inability to marshal its resources in a timely, efficient manner to create standardized measurement and tracking solutions to combat fraud and safeguard advertiser funds.

And, as with the meteoric growth of digital advertising, advertisers are all too willing to jump in, versus testing the waters or forgoing investing in these emerging channels while fraud prevention controls are introduced, tested and rolled out. The net result is that advertisers must spend more money spent on ad tech, fraud detection and viewability services, while the downward pressure on working media dollars multiplies.

Earlier this spring, Forbes published an article on ad fraud and the OTT market, in which it interviewed Adam Helfgott, CEO of MadHive. Mr. Helfgott identified a range of ways in which OTT ad fraud can manifest itself. These included fraudulent arbitragers misrepresenting where an advertiser’s impressions actually ran and app-based or device-based fraud which report uncharacteristically high activity levels, not reflective of human consumption patterns.

While Mr. Helfgott believes that OTT ad fraud can be combatted using blockchain-based technology, he suggested that the first step in the process is for industry stakeholders to acknowledge that OTT ad fraud can and is occurring. That said, it is scary to think that there are those who would believe otherwise.

If knowledge truly is the key to success, then perhaps the ad industry would benefit from Austrian philosopher, Ludwig Wittgenstein’s words of wisdom:

“Knowledge is in the end is based on acknowledgement.”

Brand Suitability vs. Brand Safety

By Brand Safety, Digital Media, Marketing, Marketing Accountability, Programmatic Buying No Comments

Brand SafetyAmused, yes. Concerned, potentially. Shocked, no longer when it comes to the cavalier attitude exhibited by some in the digital media supply chain when it comes to an advertiser’s digital media investment.

That said, I have been intrigued by the nuanced manner in which agencies, ad tech providers and publishers now address the topic of brand safety. Interestingly, many in the digital media supply chain have begun to differentiate between “brand safety” and “brand suitability.” Ultimately, marketers will have to weigh in on whether or not there is a difference and why they should give any provider relief when it comes to protecting the brands that they steward.

Recently, Integral Ad Science (IAS) released the results from a research study which they conducted that suggests that while approximately one-half of those surveyed understood that there was a difference between these two perspectives, 27% of the digital media buyers surveyed were unaware of the difference. To be fair, as defined, the differences are subtle to be sure. One deals with controls to mitigate potential damage to a brand’s reputation and the other with targeting parameters such as viewability and content adjacency.

Candidly, it is fair for marketers to ask the obvious question, “Why isn’t content adjacency considered a risk to brand safety? Why the need to segregate this important variable from overall brand safety efforts?” It would seem that the industry should view any threat to the integrity of a brand as a brand safety issue. The cynic in me can’t help but believe that parsing this issue, creating a sub-category for brand suitability is simply a way to mask the industry’s inability to determine where an advertiser’s digital ads are served and to maneuver around the enhanced controls and stricter guidelines that marketers have attempted to enact to protect their brands.

It should come as no surprise that industry participants cannot agree on whether or not the 4A’s Advertising Protection Bureau (APB) guidelines issued in 2018 are adequate or too restrictive… assuming they were even aware of the guidelines to begin with. This also helps to explain why only 9% of the IAS survey participants indicated that they were “very” satisfied with the digital ad industry’s overall efforts when it came to brand safety. 

For a marketer, there is nothing more important than the sanctity of a brand, the relationship it enjoys with its customer base and the long-term value, which that represents to the organization. Any attempt to subjugate the topic of brand safety for the convenience of being able to scale a campaign, extend campaign reach or to enhance supply chain participant revenues, is simply not appropriate.

Questioning the efficacy of or the need for brand safety policies, whitelists, blacklists and or the money being invested by brand marketers to monitor ad placements and adherence to these guidelines comes across as extremely self-serving and contrary to the notion of brand safety. Brand safety should not be an either or proposition.

While progress has been made, the digital ad industry must be pressed by its advertising base to remain vigilant to protect the sanctity of their brands. When it comes to the philosophy of brand safety and the industry’s commitment to it, marketers cannot allow their supply chain partners to relax their standards on this front for any reason. The industry should never forget that it is the brand marketer that bears all of the risk when it comes to challenges to brand safety.

How Will You Assess the Benefit Delivery of Your In-House Agency?

By Advertisers, in-house ad agency No Comments

in-house ad agencyThe number of marketers transitioning portions of their advertising from agency partners to in-house operations has grown in recent years. According to the Association of National Advertisers (ANA) 2018 study on this topic it found that “78% of its members had in-house agencies,” which was up from a level of 42% in 2008.

As marketers seek improved levels of speed, control and efficiency, the trend of marketers transitioning select services in-house or, in some instances, seeking to build full-blown internal agencies will likely continue.

Company management’s goals regarding this decision often revolve around the procurement of advertising support with shorter turn-around times and lower costs than what can be achieved through its external ad agencies. The question to be asked is; “How will in-house agency executives measure and report on their operation’s benefit delivery?”

Capturing data and providing feedback on the effectiveness and efficiency of in-house operations is a must when it comes to validating its existence, assessing project through-put potential and evaluating colleague satisfaction. That said, determining what performance criteria to measure and the methodology to be employed is an important decision.

In a recent article entitled; “Taking your marketing in-house? It is time to improve productivity” Darren Woolley, Global Chief Executive of TrinityP3, an Australian based marketing management consulting firm, suggests that when it comes to benefit delivery, in-house agencies are overlooking the “single biggest financial benefit” that they provide, which is “improving productivity.”

Measurement of “what” an in-house agency produces in addition to the cost of delivery aside, Mr. Woolley rightly points out that in-house agency executives have the unique ability to enhance the productivity of their operations by “streamlining structures and processes” between their internal clients and the in-house agency team. This is a structural advantage, not always available to a marketer’s external agency partners who have to adopt to their clients’ internal processes, no matter how inefficient they may be.

The good news is that there are resources available to assist marketers with crafting in-house agency effectiveness measures and to benchmark their performance. As an example, the In-House Agency Forum (IHAF) offers its members access to a normative database of performance benchmark and the ability to customize a performance survey that they can field to assess their service delivery where it counts most… with their internal clients.

Establishing the storyline for assessing in-house agency value delivery is critical to driving productivity and positively shaping stakeholder expectations. In the words of Paul Meyer, “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.”

 

 

 

 

 

 

 

 

Navigating Marketing’s Turbulent Waters

By Advertisers, Advertising Agencies, Marketing, Marketing Agencies No Comments

light houseHaving choices can certainly be a good thing. But an overabundance of options carries its own set of challenges. Thom Browne, the American designer once said that: “When people have too many choices, they make bad choices.” 

While an apt description of the $560 billion global advertising industry or not, the expansion and fragmentation of the advertising sector, fueled by rapid advances in technology has complicated things for many of the industry’s stakeholders. Consider the following:

  • In addition to traditional TV, there are over 100 streaming services available in the U.S.
  • According to Internet Live Stats, there are 1.7 billion websites on the worldwide web
  • Fast Company estimates that there are over 525,000 active podcast shows
  • Author Scott Brinker identified 7,040 MarTech solutions in his 2019 Marketing Tech Landscape
  • Agency Spotter indicates that there are 120,000 ad agencies in the U.S., 500,000+ worldwide
  • Inc. Magazine has identified 700,000 consulting firms across business functions globally

As the plethora of options have grown, so has the level of angst and uncertainty among marketing practitioners and suppliers alike. For an industry that has always prided itself on its ability to adapt to change, the current environment is somewhat unsettling.

Complicating things is the consumers growing disdain for advertising, which the New York Times profiled in a recent article entitled: “The Advertising Industry Has a Problem. People Hate Ads” in which it chronicles some of the attitudes and behaviors being exhibited by consumers that could have a profound impact on the industry. In the article, the Times referenced a recent report from Group M, which put forth the proposition that these are “dangerous days for advertisers.”

Let’s face it, there are few “tried and true” approaches that marketers can fall back on to guide their strategic and resource allocation decisions in this environment. Further, given the rate and rapidity of change from a legislative and technology perspective there are simply not that many industry guideposts to assist marketers in effectively charting a course forward or in evaluating progress.

While we believe that there will be a contraction in the supply chain, marked by a consolidation of agency brands, consulting firms, martech solutions providers and media outlets, we don’t believe that this suggests a return to simpler times.

To reduce the level of dissonance, marketers will likely seek to streamline their “world” by rightsizing their agency networks, clarifying roles and responsibilities among their suppliers, transitioning certain work in-house and taking a more considered and cautious approach to the adoption of “shiny new objects” whether related to technology or messaging options.

Given the continued focus by their C-Suite peers on marketing performance, CMOs will maintain a dual focus on driving revenues, while achieving efficiencies across their supply chain to boost working dollars as a percentage of total marketing spend. This is not an either/ or option. Recognizing this “reality” an advertiser’s agency and consulting partners can provide critical support by focusing on the identification of waypoints on the path to performance, rather than pursuing a grandiose focus on future-think outcomes. In the words of 17thcentury Japanese shogun leyasu Tokugawa:

“Let thy step be slow and steady, that thou stumble not.”

 

 

Work from Home or Not at All. The Evolving Role of Perks in Attracting Talent.

By Marketing, Talent No Comments

ping pong tableThe ping-pong table sat idle, covered with stacks of paper, the modern day version of an in-home treadmill as hanging plant holder. Once considered an important perk and a reflection of a firm’s employee-centric culture, ping-pong tables in the workplace may have seen their halcyon days.

The marketing industry as a whole is wrestling with the issue of attracting and retaining talent. So much so in fact that the Association of National Advertisers’ CMO Growth Council made “talent and capabilities” one of its five core pillars for “driving business growth and societal good.” Globally, business leaders are working with their counterparts in academia to help attract young people to the marketing profession, while aligning curriculums with the emerging needs of a fast evolving industry to better prepare students for a marketing career. Additionally, consumer marketing companies, advertising agencies, media firms and others within the marketing sector have stepped up their on-campus recruiting efforts in an effort to identify and secure the next generation of marketing practitioners.

Thus it was with great interest that I read a recent article in Knowledge@Wharton entitled;Wither the Ping-Pong Table? Which Perks Matter Most to Employees.” The article focused on the role that perks play in attracting and retaining employees.

One of the principal benefits of perks is their appeal to “top performers,” that small percentage of a firm’s employees that drive disproportionate value. Modern day perks range from paternity leave to flex time, unlimited vacation, on-site gyms and dry-cleaning service. Equally as important as their appeal to top talent: “Perks are symbolic of valuing employees, and people will give more when they are in a culture which is supportive and caring.” This according to Nancy Rothbard, Professor of Management at Wharton,

For the marketing and advertising industry, which has increased its efforts to replenish its ranks of energetic, knowledgeable professionals across a range of functions, perks play an important role in their talent sourcing efforts. Aside from helping to attract newcomers, perks also play a vital role in helping to energize a work place, build comradery among co-workers and reinforcing a firm’s cultural identity.

According to the Wharton article, perks that emanate from an organization’s culture tend to resonate with its employee base in a way that yields significant symbolic value. One example cited by Sigal Barsade, Professor of Management at Wharton was the offering of pet bereavement days, which can reinforce the notion that a company’s culture traits include “affection, caring and compassion.”

So what perks will provide the greatest value for your firm? Unlimited vacation, while appealing, is also quite costly. Perhaps goat yoga will yield the same results, with lower costs to the organization. Either way, the role of perks, rather than a reliance on the escalation of salary dollars, cannot be underestimated in winning the talent game.

3 Reasons to Exercise Caution When It Comes to Influencer Marketing

By Advertisers, Media, Media Transparency, Social Media No Comments

CautionGiven what we know, it is natural to wonder what could possibly be fueling the meteoric growth in influencer marketing. The hypothesis driving marketing spend in this area is that consumers are more likely to buy from someone they trust and that influencers can instill a level of trust between consumers and brands.

Influencer marketing campaigns seek to achieve this desired end by incorporating social content and or sponsored blog posts by individuals who have purportedly cultivated a large base of engaged followers. The hope among marketers is that positive feedback on a brand from these influencers can enhance their brand’s appeal and drive sales to a greater extent than they could through direct-to-consumer advertising.

As a result of this belief, influencer marketing will reach $15 billion by 2021, up from $2 billion in 2017, and will enjoy a 40% annual rate of growth for the next five years (source: Business Insider Intelligence). Clearly, the industry has taken the words of Alvin Toffler, American writer and futurist to heart:

“It is better to err on the side of daring than the side of caution.”

However, as the industry has seen with the rapid rise of programmatic media, just because a market sector is growing, does not mean that it is effective, efficient or without risks and therefore worthy of an increased share of an advertiser’s media spend. We believe that there are three reasons why marketers may want to exercise a little dose of caution when it comes to their influencer marketing investment.

Reason Number One: It is important to recognize that most consumers make the distinction between peer-to-peer advice and influencer marketing. This has become even more pronounced given that the FTC has introduced guidelines to prevent influencers from accidentally or intentionally misleading their followers, requiring them to disclose their relationships with the brands and companies that they are writing about. These guidelines include using disclosures such as “#ad” or “paid for by” at the beginning of a post or a video and prohibits misleading endorsements or the use of unsubstantiated claims by influencers that a product marketer couldn’t legally make. Additional regulatory action in this area, however difficult to police, will make the blurring between influencer recommendations and paid advertising even more apparent to consumers. The question is; “What impact will the need to more overtly identify influencer posts as paid endorsements have on the appeal this type of marketing?”

Reason Number Two: U.S. internet users continually seek to avoid the myriad of frustrating digital advertising practices employed by marketers. This can be evidences by the rate at which people are opting out of cookies and deploying ad-blocking software to insulate themselves from commercial and or inauthentic messaging. How prevalent is this you ask? According to eMarketer, one-in-four U.S. internet users currently utilize ad-blocking software. Yet as influencer marketing grows and the regulatory environment has tightened, the potential for unethical behavior has also risen, presenting challenges to both marketers and social media platforms. These challenges include fake follower and or user bases, the publishing of inauthentic posts and fraudulently representing vanity metrics, such as social followers. To mitigate this risk, some social platforms have begun to move away from vanity metrics, focusing more on the quality of an influencer’s content, which, ironically is counter to what many brands seek (e.g. influencers with at least 10,000 followers across a number of social platforms). Earlier this spring, independent investigations into Amazon’s “review economy” found that of the 200 plus million reviews analyzed, over 11% were untrustworthy. If such activity were to occur and to become known to consumers, who are already frustrated by such practices, the potential damage to a brand could be significant.

Reason Number Three: Influencer marketing is fraught with transparency and fraud challenges. At a minimum, this makes it very difficult for marketers to assess the efficacy of the fees paid and results attained by their social media campaigns. One of the challenges is that marketers will often employ specialist influencer agencies to manage their influencer marketing initiatives. Like with programmatic digital media, the presence of non-transparent mark-ups and masked commissions makes it difficult to truly assess the fees being generated by such agencies and the amount of a marketer’s influencer marketing investment that is actually passed on to the influencers themselves. On the fraud front, marketers clearly bear the brunt of the risk. Sadly, too many of the stakeholders in the influencer marketing supply chain (i.e. agencies, influencers and platforms) all benefit from inflated user metrics. Thus, the motivation for reform may be less intense than marketers may desire. Let’s face it, fake followers (bots) have plagued influencer marketing from the onset, sparing few if any social platforms:

  • Facebook proactively closed-out 1.3 billion “fake accounts” in 2018.
  • A study by the University of Southern California and Indiana University found that up to 50 million Twitter accounts could be bots rather than genuine users.
  • YouTube has often been in the news for “fake” views. Significant in that views are the basis by which the platform and people who make a living posting to this platform earn money.
  • MediaKix recently estimated that 1 out of 10 Instagram users may be bots.

Sadly, when companies, individuals and or platforms choose to employ the use of bots to falsely drive their social media metrics it isn’t often readily detectable and to date, has not been preventable. According to CBS Interactive, 15% of influencer marketing spend is lost to fraud, costing marketers $1.3 billion annually.

For brands that desire to get their content to potential customers through the use of influencers, proceed with caution. The value proposition of this marketing channel is compelling, but the difficulty in quantifying a true return-on-investment in this area is equally as challenging.

How Advertisers Can Minimize “Out-of-Scope” Surprises

By Advertisers, Advertising Agencies, Agency Fee & Time Management, Billing Reconciliation, Scope of Services No Comments

project scope

In many companies, once the annual marketing budget has been submitted and approved, it is often set in stone, with little opportunity for incremental funding over the course of the fiscal year. Moreover, many organizations employ a line-item accountability approach to budget management, which limits flexibility for shifting dollars from one initiative or one market to another.

Thus, it is important to approach the annual Client/Agency planning process in a deliberate and careful manner. As Ben Franklin once intoned: “By failing to prepare, you are preparing to fail.”

Outside of the budget, one of the key outputs of the planning process is a Statement of Work (SOW) document that accurately and completely identifies all agency deliverables and detail on the timing or due dates of key deliverables. It is the SOW that then provides the basis for the agency to develop its proposed staffing plan and attendant fee recommendation. In an ideal world, the annual SOW is comprehensive in nature, covering both key deliverables and the prospect of potential contingency projects.

Some advertisers rely more heavily on a project-based remuneration program with their agency partners (versus retainer based fees), which lessens the risk for in-scope or out-of-scope confusion/ issues. However, since most advertisers employ an annual retainer fee based approach that is intended to cover most, if not all of its agency partner’s marketing and advertising deliverable costs, “out-of-scope” work requiring incremental remuneration potentially results in negative repercussions.

Properly executed, the annual SOW development and management process can minimize the potential for “surprises” that can be problematic for both advertiser and agency. The best approach is a combination of art and science, relying on a firm understanding of accurate historical project performance and an advertiser’s internal processes ranging from briefing the agency to securing the requisite approvals. Below are three key actions that both parties can take to minimize out-of-scope surprises:

  • Begin the annual Client/Agency planning process with a studied, fact-based review of the prior year’s SOW. This should include a review of key projects, deliverables and the amount of time and resources that were actually expended relative to estimate levels. Understand and discuss the drivers of project costs ranging from rework levels to approval delays to inaccurate estimating, and identify how those issues can be addressed going forward.
  • Review the agency’s proposed staffing plan to make sure that the time allocations and utilization rates are consistent with the nature of the deliverables (i.e. strategic vs. tactical, complex vs. adaptation, etc.). This can help to right-size the fee by aligning bill rates for the appropriate personnel with the initiatives and tasks that are best suited for their skill sets and experience.
  • Ask the agency to provide monthly time-of-staff tracking and project status reports showing burn rates and percent complete detail. This will provide both parties opportunities to make real-time course corrections on specific projects and make the requisite adjustments to keep the SOW on budget. Optimally, these reports and the resulting implications should be discussed face-to-face each month.

Ultimately, the final SOW should be submitted in a form that contains the agency staffing plan with time, utilization and bill rates by position, fee work-up sheets (direct labor costs, overhead rates, profit margins) and comprehensive rate sheets for in-house agency services (e.g. studio) and non-retainer personnel.

Regardless of whether or not the fee is direct labor or outcome-based, fixed or reconcilable, it is still important to require agency reporting and analysis of time on task and agency staff mix utilization. The insights afforded both parties from investing in this practice will inform future SOW and project scoping and minimize surprises related to excessive expenditures for incremental time and out-of-pocket expenses.

 

 

Time for a Financial Review?

By Advertising Agency Audits, Contract Compliance Auditing, Marketing Accountability No Comments

Knowledge Transfer

Really?

No triple bid.

No staffing plan.

No reconciliation.

Fixed fee

100% advanced billings.

Slow job cost reconciliation.

Poor Agreement language.

Old Agreement.

No examples / templates.

No breakout of retainer vs. out-of-scope fees.

No agency reporting of costs / hours.

Programmatic supply chain not understood.

Use of in-house agency services, no rate sheet.

Use of in-house agency services, not reconciled.

Freelance billed at full retainer rate.

Interns billed at full retainer rate.

Credits held.

Low Full Time Equivalent basis.

High Rate per hour.  No fee detail.  Non arms-length use of affiliate.

Mark-up applied.

Float.  Kick-back.  Favored expensive suppliers.

Duplicate charges.

Time reported doesn’t match time system.

Overpayments.

Luxurious Travel.

Gifts.

That’s the short list.

Don’t let this happen to your critical marketing dollars.

Update and lock down financial terms in Agreement.

Tighten up definitions.

Enhance Agency reporting required.

Perform routine spot checks.

Follow the money to the ultimate end user.

Vet Agreement with ANA template.

Ask the Experts.

Maintain consistence of control and visibility across the Marketing supplier network.

Maintain trust but validate Agency financial activity.

Strengthen the Agency relationship through understanding and alignment.

Really.

Advertisers Take Decisive Action to Safeguard Their Media Spend

By Advertisers, Featured, Media, Media Transparency No Comments

SafeguardAdvertisers, particularly larger, multi-national advertisers are assuming a greater level of responsibility for their organization’s media investments. The goal is to safeguard those investments and to spend their media dollars wisely.

The actions being taken by advertisers are clearly the result of the media industry not moving quickly or forcefully enough to resolve key issues confronting advertisers. Issues such as fraud, brand safety, viewability, tracking and performance vouching pose serious risks that undermine media effectiveness.

On the fraud front alone, cybersecurity firm Cheq issued a report earlier this year indicating that global ad fraud will cost advertisers “an unprecedented $23 billion” in 2019. Experts have stated that the continued growth in digital media expenditures, which will top $300 billion worldwide, combined with the lack of governmental and industry oversight makes this category highly appealing to fraudsters and organized crime.

Given the complexity of the global media supply chain and the technical nature of the sector advertisers are seeking to increase the level of rigor surrounding media performance and accountability.

Advertisers seeking greater transparency and security over their media funds and data have grown weary of waiting for the requisite level of support from their media supply chain partners. This has led some advertisers to transition certain aspects of their media planning and buying activities in-house. Others have formed or increased staffing and resource support for corporate media functions to enhance controls and stewardship over the investment of their media funds.

More broadly, in the wake of the Association of National Advertisers (ANA) 2016 study on media transparency, the organization in conjunction with its partner in the study, Ebiquity, issued a recommendation for advertisers to “appoint a chief media officer (in title or function) who should take responsibility for the internal media management and governance processes that deliver performance, media accountability and transparency throughout the client/ agency relationship.”

Recently, the World Federation of Advertisers (WFA), through its Media Board, recently announced that its members had formed the Global Alliance for Responsible Media. The Alliance will also be championed by the ANA’s CMO Growth Council, a member organization of the WFA. The council, which includes a coalition of advertisers, agencies, publishers, platforms and industry associations, will focus on delivering a “concrete set of actions, processes and protocols for protecting brands.”

We are hopeful that the initiatives being taken by progressive marketers such as P&G, Mars, Unilever and Diageo will spur the industry to action when it comes to comes to controls that safeguard media spend and improve the efficacy of those investments for all media advertisers.

While a rising tide may lift all boats, as the adage goes, we know from experience that when it comes to media accountability organizations cannot rely solely on the efforts of other advertisers, agencies or associations to protect their self-interests. This requires an ongoing commitment to improving media accountability, performance monitoring and stewardship efforts by them, their agents and intermediaries. In the words of Thomas Francis Meagher: “Great interests demand great safeguards.”

 

 

Assessing the Potential for Transitioning Work In-House

By Advertisers, in-house ad agency, Marketing Agency Network, Production Services No Comments

IdeasAn increasing number of marketers are transitioning portions of their advertising activities from their external agency partners to in-house teams. A survey conducted by the Association of National Advertisers (ANA) in the summer of 2018 revealed the following:

  • 78% of survey respondents indicated that they had an in-house operation of some sort
  • This is up 58% from 2013 and 42% from 2008
  • 90% of marketers with in-house operations have increased their in-house team workloads
  • 70% of marketers have shifted work from external agencies to in-house teams in the last 3 years

Although the ANA survey indicates that some in-house agencies are increasingly handling brand strategy and creative ideation work, most marketers that we serve continue to rely on external creative agencies for this type of work and are initially focusing their in-house efforts on a range of specialty services. This approach can minimize risk and cost, while putting the essential building blocks in place for eventually launching deeper into in-house agency commitments, if desired.

Endeavoring to build out a full-service in-house creative agency is certainly achievable and there are a number of successes that one can point to. Consider Innocean Worldwide which originally began as the in-house agency for Hyundai-Kia and has gone on to acquire clients outside of the Hyundai Motor Company. Innocean’s work has won global recognition for its creative work that includes a Silver at Cannes and an ADFEST Grand Prix in 2019. As well, Innocean has committed to growing its brand and weight in the industry by acquiring noted independent creative agency David & Goliath in late 2017.

However, building out a full-service in-house agency takes time and requires an investment in evolving the culture of the operation, attracting top-notch talent, developing the appropriate processes, and positioning itself to be successful in winning internal client confidence and ultimately the creative development work.

The effort associated with attracting and retaining top-quality creative personnel to ply their wares at an in-house agency can be significant. Providing end-to-end creative services requires an increase in headcount and drives up operational fixed costs. Further, the timeline required to demonstrate in-house agency abilities and to consistently produce fresh ideas and deliver quality work is uncertain. This is particularly so if there isn’t a corporate mandate for brand marketers to utilize the in-house services. Thus, management must build-in enough time and budget to allow for relationships to take hold between the in-house team and the brand management teams, and for the in-house team to “learn” how to successfully compete for and win creative assignments.

Thus, many organizations focus initial in-house efforts on areas where the operations can clearly and immediately add value. Such services may include content curation and creation, digital, print and internal video production and the development of sales promotion and collateral material. Consolidating tasks such as these with an in-house team can improve a marketer’s agility by reducing project turn-around times and costs while improving the caliber of the output.

Many in-house operations begin as shared-services providers, subsidized by the organization and often with mandates for brand marketers to use their specialized services. Which is not a bad way to launch an in-house agency. Over time, some operations may adopt a charge-back model, where they must compete with external resources to win projects from their brand marketing peers.

Each model brings with it certain challenges. The charge-back model, with no corporate mandate for use, raises risk for the in-house team who must generate revenue to cover internal staffing, resource and real-estate costs. If the team cannot win work, their very existence may be jeopardized. And during competition for work, the team must address internal client perceptions that the services they provide will be less expensive than an external creative agency. On the other hand, if pricing is comparable to an external resource, brand marketers may question the risk / reward of transitioning work away from an established external specialist creative shop and bringing it in-house.  Additionally, end-user’s want to feel that utilizing their in-house agency “makes their life easier.”

Regardless of the model employed or the scope of services offered, it is imperative to embrace a strong project-management orientation with a comprehensive workflow management toolkit. The need to evaluate potential projects, provide cost and time estimates, log projects, manage projects and secure sign-offs requires a disciplined in-house project management function.

An important part of generating and demonstrating efficiency gains for the organization is the ability to track time-on-task, project gestation and completion rates, rework levels and the like…all of which require a commitment to recording and tracking in-house activities and utilization rates. Such information will also inform management on how and when to expand or contract staff levels and when to tap external resources to augment in-house skill sets.

The need for internal advertising support is real and makes a great deal of sense regardless of the breadth of services an organization seeks to source from an in-house operation. However, the application of the model requires a disciplined pragmatic approach to both set the breadth of service to be offered the team and to efficiently and effectively handle the anticipated volume of work.