Majority expected greater cost effectiveness and nimbleness but the reality does not match
Global marketing and commercial advisory firm, Alchemists, in collaboration with ISBA and CvE, have today published the findings of their survey into in-housing, The State of In-housing 2023. The report found that, despite businesses being keen to in-house more work, the majority of senior marketers surveyed admitted the reality didn’t match the expectations and that they needed more operational preparation for in-housing.
Alchemists surveyed senior marketers from a range of large and medium sized businesses in the UK which have either already in-housed or are planning to soon. According to the data, there was a disparity between the expectations for speed and nimbleness and the reality; 93% expected it to be greater as a result of in-housing but only 40% experienced it. In addition, while 93% expected improved cost effectiveness as a result of in-housing, it was only experienced by less than two-thirds (60%) of respondents. In addition, 47% expected more confidentiality by having in-house capabilities, but less than half (20%) cited it as a reality.
The survey and resulting report look in depth at in-housing structures in brand marketing functions and included responses from a range of companies including E.ON and Arla. Nearly two thirds (60%) of respondents said that they plan to in-house more of their marketing activity this year, which shows that the topic is at the forefront of the minds of senior decision-makers.
Despite the trend upwards towards further in-housing in the future, reassuringly, over two thirds of the brands surveyed don’t see their in-housing plans as a threat to agencies.There was also a gap in knowledge on how to effectively in-house, with a specific disparity arising between content production and data and analytics. The report found that while three quarters (73%) of respondents have existing in-house provisions in place for content production, data and analytics are currently the least in-housed functions, with less than a third (27%) of respondents currently in charge of their own functions in these areas. According to the survey, almost 75% responded that they didn’t understand how to bring these functions in-house. This indicates a gap in knowledge which may be caused by constantly changing data protection legislation and customer privacy laws – resulting in companies being unable to keep pace and adapt with the ever-shifting demands in this area.
Despite the lack of knowledge on how to do it, the study found a willingness to change their current ways of working with over half (58%) of respondents stating that their long-term aim is to manage tech operations in-house, via either their marketing, procurement or operations department. Just 11% stated that they would manage them externally long term, via an agency or partner. “Taking control” was cited as the biggest motivator for bringing these functions in-house, which is in line with retaining ownership over private data.
Vlad Komanicky, CEO and co-founder of Alchemists said of the survey and findings: “With the shift towards in-housing strategies now firmly entrenched into the marketing landscape, the role that advertisers and agencies play in this space is fundamentally changing. What is clear is that in-housing is never a binary decision, and businesses are looking for greater control, a factor which is the greatest driver of in-housing. The gap between brands’ expectations and reality shows that they require consultation and expertise on how to minimise this mismatch before actioning company-wide plans. To ensure money, talent and opportunity are not wasted, brands are going to need a deep understanding of why such a gap exists, and fix problems to deliver a return on their investment.”
Nick Louisson, Director of Agency Services at ISBA, added: “In-housing has become an increasingly important consideration for ISBA members. The report reveals that bringing services in-house can be more challenging than expected. As marketing models evolve it’s essential that marketers have access to the right insights and support to successfully transition to new ways of working. This report is a must read for anyone considering in-housing marketing services in their organisation.”
Nick King Global VP of Commercial at CvE, added: “The way in-housing implementation is considered has matured massively over the last few years. Insights in this new report show an impressive 25% of marketing departments who have in-housed technology functions own and operate most of their tech, with investment into proprietary tech too. Brands are also controlling a greater proportion of their own data, with growing multitudes of opportunities to obtain it. However, making it accessible and usable is where the greatest challenge still lies. Advertisers have the choice of how much of the value chain they bring in-house, and an evaluation and migration program are essential to understanding the immediate needs and how it works towards their goals.”