The choice to produce your own advertising program or hire an outside agency will depend on many things – and every organization has its own needs. In either case, you’ll never go wrong if you work with passionate, dedicated and creative people. For at least one generation of business, companies have struggled with the question of whether or not to establish an in-house agency or to contract with an outside agency to perform advertising functions. Let’s take a look at both options, to help provide you with enough information to get you on your way.

Companies bring their advertising in-house for four primary reasons: cost savings, control, convenience and continuity.

Cost savings

Not having to write checks to an outside firm may appear appealing. Agencies normally charge by the hour and have to include all of their labor costs, overhead, taxes and profit in the hourly rate. You may even save on the commission due the agency from the media by paying net rates. Perhaps you have excess office space and other costs that you are already paying for which can help to justify the savings.

You’ll have to calculate all of your increased costs (people, computers, training and software, etc.) and compare it to the fact that most outside agencies typically realize a 5-7% operating profit. Therefore, companies need to ask themselves if the organizational sacrifice makes sense for this amount of savings. Also, if you have no activity for a certain period, advertising costs nothing when using an outside firm; however, if you have an in-house agency, those costs don’t disappear.

Controlling your advertising

With an in-house agency there is certainly 100% control. The face-to-face proximity to your staff may be an advantage, as well as having the ability to replace employees as needed. Responding to market and customer needs is literally just around the office corner, and you can update schedules and shift priorities rapidly. Your advertising staff can focus on your products only – resulting in strong product knowledge and equity among your team. You can watch your ideas come to fruition.

 

Keep in mind, though, that executing other’s ideas is not the ideal situation for creative types. The desire to produce original work is in an artist’s blood. So it’s easy to be in charge for eight hours a day, but it could yield less-effective advertising campaigns if all the staff does is execute management’s ideas.

Convenience

Having an in-house agency may reduce communications time and mistakes. Everyone has the same information in less time while also speaking the same corporate language, and perhaps projects may even get processed faster with a higher quality of information. Convenience also comes in the form of the fact that the staff is there for you and you alone.

On the other hand, speaking the same language may not be such a benefit. Frequently, in-house agencies have trouble seeing their product from different vantage points. Companies sell to other companies with varying cultures and languages themselves. Outside agencies can create language that is effectively targeted – and communicate it to you instantly via today’s electronic tools.

Continuity

Some thinking exists to suggest in-house workers remain in-house longer, and therefore intellectual capital is preserved. Less product training and research is required, as the staff will build up a wealth of knowledge related to product development and communications requirements. Turnover and hiring costs may also be reduced. It requires high commitments to training, however, and continually providing workers with challenging assignments that they can at least attempt to excel in.

Caution must be givenan in-house staff may develop staleness in its work. Outside agencies know that in order to succeed, new and fresh ideas are always required.

So, these are some solid reasons (with a few counterpoints) for bringing your advertising in-house. Here’s some thinking about outside agencies and what they can bring to your table.

People

Your only real assets are people and their skills. Advertising agencies attract highly competitive, ambitious, entrepreneurial people who are creative in their approach to solving problems. Their natural habitat is a creatively charged atmosphere — not the safety and security of an in-house agency. People who work at ad agencies have a diversity of work assignments and the varying activities only benefit the clients. In-house agency people generally have one product and one client. Good creative people thrive on working on a variety of account assignments.

Objectivity

An outside agency will provide objectivity. The greatest combination an agency can make to its clients is the independency and objectivity of its recommendations. A qualified agency will bring different approaches and ideas – with energy and passion. An outside agency has learned to say “no” to clients – often saving them from costly marketing mistakes. This kind of objectivity is at the core of the concept behind an outside agency.

Accountability

Outside agencies know that their survival is based on the results of their labors. It is arguably the one insecurity that exists in an agency – to maintain a keen sense of competitiveness. Every agency knows that its own future with a client rides on the success of its work. The need to survive, coupled with the thrill of success, is a true motivator.

Experience

Experienced agencies offer a treasury of knowledge gained from solving many different kinds of problems for clients in various industries, regions and cultures. Experience from one industry can easily translate to another and this can be a huge asset to the agency’s clients. Because of this experience an agency will know what will and will not work before a campaign even launches. An in-house agency will be challenged to match the sum of those experiences.

Creativity

Nothing is more powerful than a great advertising concept. Nothing else can produce dramatic market change and brand recognition so quickly. Ask advertisers that appear in Super Bowl ads why they invest in creative thinking. Outside agencies are trained to approach advertising from many different perspectives and deliver nothing but inspiring, memorable and highly targeted communications to your market.

The choice to produce your own advertising program or hire an outside agency will depend on many things – and every organization has its own needs. In either case, you’ll never go wrong if you work with passionate, dedicated and creative people.

By Charlie MacLeod