As reported by the Wall Street Journal, this year’s survey of 325 of the US largest brands’ was the most comprehensive ever of in-house creative agency trends. But in many ways the results didn’t surprise me. The astronomical growth of in-house agencies, up by 52% since 2008 (and all that), is still largely attributable to the never-ending drive to do more with less money. And although other benefits are sighted, such as better brand (or industry) knowledge or better spend transparency, it is still cost savings that are the prime stated motivator.
Why do in-house agencies outsource?
The main function of the in-house agency of course is to provide relevant creative solutions to achieve marketing objectives. Yet almost every in-house agency reports that marketing demands are spiralling, with the growing challenges placed upon them straining their capacity to deliver. Anecdotally, I frequently hear of IHAs recruiting full-time production staff only see them sit idle between campaigns, or who have too narrow a set of skills limiting how they can be occupied. Worse still, highly qualified IHA creatives having to deal with handle-turning work, that demotivates and overworks them.
So it should come as no surprise that 67% of in-house agencies do not feel they are adequately staffed. And given that around 20% of their headcount are freelancers, it sounds like the narrow focus on cost is limiting many in-house agencies’ creative potential.
Corporations are naturally wary of increasing headcount in areas that do not directly benefit their business, or which are not regarded as necessarily core. But freelancers come with their own problems: they are very expensive, they require a lot of hands-on management on acquire, interview and onboard, they often require (re-)training on brand and the preferred platforms and applications, and very often will tie up permanent staff in the day-to-day. When bedded in and used for a long period they may also be subject to corporate or state rules about employment terms and provision of benefits.
The preferred solution to this squeeze between cost and scale is outsourcing functions where the IHA doesn’t bring value. In fact 63% of agencies claim to outsource some of their work. And as viable and credible options now exist offshore, with agencies that can provide full 24/7 all-media service at world-class quality, it’s hard to argue that they shouldn’t at least be tried.
Avoid the ‘outsource the simple stuff’ trap
As always with such initiatives, the answer is slowly and carefully. While nowadays you won’t be blazing a trail (many others have gone before you), it may still be something to which you and your team need to adapt to get the best from. Without preparation and with a poor choice of partner, you will end up outsourcing lowest common denominator work, which more often more trouble than it’s worth, with savings in money vastly exceeded by the overheads in time and frustration. The aim is to outsource work that requires skill and judgement, though which is not dependent upon your in-house teams’ unique insights.
How to outsource?
Pilot with an outsourced production agency that has experience with your type of work, where you can speak to peers who are happy to testify to their capability and effectiveness. Don’t just listen to the sales patter, but speak to the project managers themselves, and above all listen to the questions they ask you. If the agency has made it to your short list then they are clearly capable of doing the work, but if you ran test work by them, apply this checklist:
- How well did they communicate with your team, and did they take on board suggestions, tweaks and adjustments from your team?
- What questions do they ask and do they consistently apply the given answers?
- Most importantly, did they add value to the process in any way, or were they just passive order takers?
Find a project that is typical of the kind of work that needlessly ties up your creative resources, and speak to your chosen production agency about how they would handle the work. Can they use your workflow system in asset management (or will they provide one)? How do they handle revisions, what’s the turnaround time, will they be held to SLA?
And even though the agency’s services may cover all media, don’t feel the need to test all of them. It will be useful in the future to have a single offshore brand governor, but if they prove consistent in their engagement and output and you’ve seen their portfolio) you can generally assume this will be the case with any type of work they are capable of carrying out.
So, if the main findings of the 2018 IHAF Agencies Today Report are true, maybe now is the time to look at outsourcing your production, and allowing your creatives to focus on what they do best. And especially when the chargeback costs are greater than the cost of outsourcing, you might find that this brings in more budget for you to devote to your creative staff and their systems.
For more information about how to go about outsourcing production, feel free to contact Robert Berkeley at firstname.lastname@example.org.