4 Signs You Should Swap Your In-House Agency for an Outsourced CMO

by / ⠀Entrepreneurship Startup Advice / February 7, 2019
In-house agency vs. outsourced CMO

The in-house agency, like most marketing trends, has had its share of leaps and starts. In 1986, Bank of America led the way with its internal agency, Enterprise Creative Solutions; in 1987, Fidelity Investments followed, founding Fidelity Communications and Advertising.

Then, as quickly as it had come, interest in internal agencies waned. It wasn’t until the early 2000s, with the proliferation of mobile and digital marketing, that the in-house trend resurfaced. By 2008, according to a recent Association of National Advertisers report, 42 percent of surveyed companies had an in-house agency.

Excluding a dip during the financial crisis, internal agencies have skyrocketed. Between 2013 and 2018, the ANA report found that in-house agency penetration had risen 20 percent. The ANA notes that, in addition to pressures to reduce costs and time-to-market, internal management of marketing analytics and greater transparency are driving in-house growth.

Satisfaction: The CMO’s Canary

Although the in-house agency trend shows no sign of slowing, one figure in the ANA study raised marketers’ eyebrows: Just 20 percent of respondents said they’re “completely satisfied” with their internal agency.

“Complete satisfaction” is, admittedly, a high bar. That gap, however, has made room for a different model: the outsourced CMO. If the following sound familiar, outsourcing your creative leadership might be the smarter option.

1. Your metrics aren’t moving.

Both at agencies and in the corporate world, kaizen, the Japanese word for “constant improvement,” is the watchword of marketing. The medium doesn’t matter. Whether it’s email, social, digital, or print, you should see an upward trend in your key performance indicators.

If you don’t, your team might need new strategic direction. But a one-and-done agency consultation won’t do. For improvement to be continuous, the relationship must be, too. “It sounds biased coming from me, but it’s true,” says Erik Huberman, founder and CEO of Hawke Media. “When our clients have a slow year and then crush it with an outsourced CMO, they sometimes want to do it on their own. I always encourage them to return to the table before they dive in unprepared.”

2. You’ve been slow to embrace new tools.

The marketing technology market has grown far faster than marketers’ understanding of it. The trouble is, automation and similar tech-based approaches have become the table stakes of marketing. CMOs plan to sink a collective $122 billion into martech by 2022, yet a survey by GetResponse and SmartInsights found that 92 percent of marketers are ineffective at marketing automation.

Can’t marketers just ask their martech vendors for a tutorial? They can, of course, but they’re likely to get a tactical rundown on how to use that specific tool, not a holistic view of how marketing technologies can work together.

Why might an outsourced CMO be good for teams struggling with marketing technology? Because, according to Chiefmartec.com editor Scott Brinker, teams tend to develop deep but narrow competencies. “Some companies have become masters at wielding content marketing to drive business,” Brinker explains. “Others have built superb social communities. Others have optimized ecommerce experiences, from desktop to mobile to chatbot messaging platforms.” Do-it-all agencies rarely have the depth of martech knowledge that CMOs from tech-heavy teams do.  

3. You’re taking too few — or too many — creative risks.

Blame it on pack mentality, internal hierarchies, or whatever else you want: Companies tend not to question the work their own teams do. Although internal agencies are supposed to be separated to some degree from their corporate owners, leaders still tend to see them as “our people.”

The results of such a relationship usually go one of two directions: Blandness, which leads to flops like GAP’s “modern” logo that lasted a whopping two days, or recklessness, such as Cartoon Network’s guerrilla marketing campaign that resulted in a Boston bomb scare.  

Not only does an outsourced CMO offer a fresh perspective, but he or she has far greater freedom to speak up when something seems off. Because outsourced CMOs work with more than one company, their livelihoods don’t hinge on being “yes men” for their clients.

4. Your two teams have become one.

Convergence is the natural result of multiple teams trying to work more efficiently together. Alignment isn’t necessarily a bad thing, but it does undercut a primary purpose of internal agencies: to provide a “Goldilocks” amount of separation between the larger corporation and its creative staff.

Unlike an internal agency, an outsourced CMO is a true third party. But compared to a traditional agency, an outsourced CMO has far more touchpoints with his or her corporate client. The result is efficiency, as well as accountability. A report by Forbes and Tableau found that organizations with greater levels of marketing accountability achieve 5 percent more marketing ROI and more than 7 percent greater growth.

In-house agencies may be booming, but the marketing landscape is constantly shifting. As it drifts toward the outsourced CMO model, firms are finding it delivers many of the same advantages of the internal agency with fewer costs. Not only can an outsourced executive save money, but the setup offers an ideal balance of creative separation and accountability. That may not be a leap forward from the in-house model, but it’s certainly a start.

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Editor in Chief of Under30CEO. I have a passion for helping educate the next generation of leaders.

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