Love it or hate it, the in-housing of work traditionally done by agencies and outside partners is becoming increasingly common. Last October, a report from the American Association of National Advertisers (ANA) revealed the trend as far too pervasive for any external partner to ignore. The findings, based on a survey of the ANA’s member brand marketers, showed that 78 percent of brand marketers now have some form of in-house operations, compared to 58 percent in 2013 and 42 percent in 2008. For 44 percent of survey respondents, those operations have been established within the last five years.
Startups in particular are questioning whether or not to in-house marketing capabilities much sooner than they were a few years ago. Sometimes the reasons are cost related, and other times it’s a matter of bringing specific marketing expertise into the company or keeping marketing functions close to internal business. Whatever the reason, if you’re wondering whether in-housing is right for you, the following tips could help you decide which way to go.
Where are you in your marketing journey?
At DCMN, we divide the marketing journey of a startup into four categories of a user or consumer funnel, based on whether you are an early-stage, mid-stage or late stage company. These funnel categories correspond to specific marketing approaches based on a company’s stage. Generally, early stage companies should focus on very targeted channels, like search engine marketing and performance paid social, whereas later stage companies can focus more on awareness building tactics, which will help them reach consumers on a massive scale. The ideal channels to reach this scale include TV, out of home and print advertising.
Progression through these stages is largely driven by the gradual development of increased market fit, which means that in the beginning and middle of your journey, you will focus heavily on product development. This will also impact how you market your product.
Early Stage: Targeting your efforts
When you’re first developing the foundation for your marketing efforts, the most important thing to keep in mind is to keep costs low as you maximize your return on investment (ROI). As a startup, you can do this by testing new channels that do not require you to take on additional personnel costs. You’ll want to start with a selection of marketing channels that you can easily manage in-house, which could include keyword targeting, remarketing and paid social. It’s also possible at this stage to test some channels with an agency, where you might not have in-house expertise or time. Content marketing, for example, requires publisher relationships, negotiating power and access to inventory. All of this might be difficult for a startup to secure, but agencies have these relationships in place and can get special deals, which you wouldn’t have access to as an early-stage advertiser.
Once you’ve identified these channels, you’ll want to determine what you’d like to get from potential marketing campaigns and at what cost. This is the point where it becomes valuable to decide what your benchmarks will be for success, which will then help you determine whether it would be desirable to increase your budget once you begin seeing results. Some common key performance indicators (KPIs) to look at in this stage include cost per acquisition of one customer and average order value. You can easily track these KPIs using Google Analytics to see how many orders you receive and from which online channels they come from. Once you’ve tested a few channels and tracked initial results, you can then optimize your campaigns to begin scaling. This can easily be done in-house.
Mid Stage: Scaling efficiently
As you begin to grow your business with the help of marketing, you’ll get to a point where more people are familiar with your brand or product and are more likely to consider it as an option to fulfill their needs. At this point, you’ll want to begin testing new channels to reach a larger audience in a way that gives you a maximum return on a minimal investment. Channels including programmatic display, performance TV and native advertising will allow you to test what’s effective and optimize accordingly.
When testing higher impact channels, especially when it comes to digital and TV media, it can be beneficial to have buying power, which means you’ll be able to negotiate better rates if your media budgets are large. This can be difficult to replicate in-house if you are not at a stage to spend large amounts of budget on one specific channel. In this situation, it can help to partner with a media agency that can give you an advantage in the market by increasing your advertising buying power. As this can be a large investment, you’ll want to look for a partner that speaks the same language as you and is willing to deliver on your KPIs. Additionally, you should partner with someone who can fill in the gaps for you: they should have processes in place for media buying, knowledge of the market and competitive landscape, access to better rates and the data capabilities to track results and optimize accordingly. Ideally, they are willing to be compensated based on the performance of the campaign, so you don’t have to take on as much financial risk upfront.
Late Stage: Building your brand
Now that you’ve used marketing to scale significantly and have figured out which channels bring you those valuable returns, you may begin to consider investing in mass market channels on a broader scale, looking into opportunities for out of home, print and TV advertising or brand partnerships. These channels will expose your brand to a very broad audience, and they may also be the ones that require a level of experience you haven’t yet hired for. You will now face a bigger choice about whether to develop large marketing campaigns internally, or if it’s the right time for you to partner with a marketing or advertising company on a more ongoing basis.
In-housing requires a lot of time and expertise and you’ll want to be very deliberate about this decision. Some questions to ask yourself before making the decision include:
- Can my team deliver performance superior to an agency partner?
- Is my core value driver product development or performance marketing? Which is more essential to my long-term survival?
- Do I want to focus on marketing so much that I am willing to take on the overhead costs involved in hiring a new team, building new processes and acquiring new tools?
- Will I be able to find, bring on and keep the talent necessary to build a full, in-house operation?
- Will the savings I get from not paying for partner services be sufficient to help me build an in-house operation and achieve a similar ROI?
The road to becoming a successful startup can be difficult, but setting the right foundation for your marketing doesn’t have to be. Understanding when to lean on partners for help and when to make key marketing hires can be the difference between hitting a ceiling in your efforts and reaching new heights of company success.
If you’re interested in learning more about making marketing hires and bringing roles in-house, please reach out to us at firstname.lastname@example.org.