In-Housing Has Its Pitfalls

Over the last few years there’s been a significant trend of clients taking some media buying in-house. I can understand the appeal and the rationale. There are benefits of doing this. First, you won’t fall victim to major agency trading desks, which exist only to arbitrage digital inventory as a profit center. The majority of media dollars are being spent in platform-based media, Facebook, programmatic and Google. They’re fairly easy to learn and Facebook and Google have teams to help facilitate success. There are a number of programmatic platforms for traditional TV and radio too. Managing this work in-house means you can dedicate staff to focus just on this.

That being said, there are drawbacks to consider as well. I worked in an in-house media operation, albeit prior to the explosion of digital/mobile/social media, but what I witnessed as drawbacks were personnel and political related problems. Those problems would still exist because people are people and politics is, well we won’t go there.

Issue 1: Complacency

My experience in an in-house media organization was that everyone was happy to have a “client side” job with great benefits. People got fat and happy and were reluctant to adapt new thinking. I left that company when I saw that no one, I mean no one, had any interest in learning about digital media. Also, no one was interested in improving workflow and decision making.

Issue 2: Echo Chamber

My experience in the in-house media operation is that most of my colleagues were order takers not strategists. They knew how to execute, but most did not know how to think or push back. The most common phrase in my experience was “we’ve always done it this way”.

Issue 3: Politics

 Agencies challenge their clients to test and try new things because they are servicing diverse clients and can call upon other experiences. A good agency is contrarian at times, unafraid to tell a client if a decision is not in the client’s best interests. (Agencies will also challenge things that are not in their own interests, too, so this goes both ways).

Issue 4: Personnel

We had one person on our team who could buy radio and one person to buy local TV. Nothing could get done when these people were on vacation or were ill. An easy solve is to have redundancies in expertise so there is a back-up plan. Agencies typically have multiple people trained on each media to buy and they plan for coverage. Also, what if you don’t like the person you hired or they decide they don’t like the situation? You either have to fire someone or scramble to add talent. If you don’t like someone on your agency team you can ask them off your business but not disrupt too many things.

Issue 5: Real Cost

An in-house operation is more expensive than just direct and indirect labor costs. People need research resources, tech solutions, training and leadership. The company I worked for analyzed the cost/benefit regularly and stuck with the in-house approach for a number of years. Eventually the costs became too high and they disbanded it. I saw the writing on the wall and left about a year before it was shut down and went back to the agency side. It was tough to leave a position that paid well and wasn’t mentally taxing, but I saw that I was becoming complacent and knew it was time to leave on my own before it harmed my career.

Issue 6: Opportunity Cost

Good support staff in media is hard to find. Settling on people with singular skill sets or limited knowledge impacts your ability to sell and grow and think about “what’s next?”. Looking only at real costs and not at how real growth might be limited is difficult to identify, but important to acknowledge.

In-housing media buying has obvious benefits, but before you do it the above should be considered. Short term costs are not the end all and be all. Agencies can add value in many ways and should be compared on a comprehensive basis before bringing everything in.

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