How Client-Side In-House Departments Are Changing

This is a three-part series about how the changing landscape in in-house departments is impacting your firm. We’ll look first at what’s happening in the larger landscape, and then we’ll look at what life is like inside a client-side department. Understanding their unique struggles is a fascinating exercise. Finally, we’ll look at staff augmentation, which is essentially your firm undertaking the staffing of a client’s in-house department.

Here’s what’s happening out there:

• Employees are Shifting from Private to Corporate. It’s been years in the making, but finally the majority of employees under the marketing umbrella are working for corporate rather than for private firms like yours. Impact: You can’t afford to view those departments as your competitor like you did in the past–you must now collaborate with them. In essence you’re working for them until they don’t need you anymore. They are not the enemy.
• Employees are Shifting Back and Forth Between Those Worlds. In the past, someone might take a job and work for the wrong side, only to switch and find their happy place by moving across the aisle. Now it’s more common to see people switching back and forth between small private shops and corporate departments multiple times. Impact: You’re more likely to lose an employee to a client than you were in the past. You also can hire corporate types, but remember that they may not be as entrepreneurial, they may not work as nimbly as you like, they may demand more structure than your other folks, and they will certainly want support (vs. getting their own hands dirty).
• Clients Want More Control Than Ever. That’s what’s motivated this in the first place, since it’s certainly not cost savings (I’ve measured that across 19 F1000 firms). They’re going to staff up for the valleys and keep the bread and butter stuff at their fingertips where they can always keep them busy. They’ll look to you for the peaks where they need extra help…or more likely very specialized help. And yes, they will still use you. According to a recent ANA study, 90% of companies with in-house departments still use external firms. Impact: Give them a very specific reason to use you. Your positioning must be extraordinary, uncommon, and episodic. They are not going to pay you a premium for ordinary marketing stuff that they could easily hire for. The three things they are least likely to want from you are content marketing, social, and influencer stuff. They keep that close to the vest. And if you are looking for the riskiest service offering to build, it is video work. That’s what nearly every client is bringing in house…or outsourcing to a very nimble provider.
• The Jury is Out on Whether Their Work is as Good as Yours. There have been some big, notable wins. There have been some notable reversals, too, where entire departments have been disbanded after much early fanfare. I don’t think we know quite yet how all this will play out, but if there’s another economic downturn, it would not surprise me if these new client teams are disbanded in large numbers. Impact: Keep your powder dry. Don’t burn bridges. Getting fired today and getting replaced by the in-house department might be temporary. There’s an initial honeymoon when these folks come to town, but they can look pretty ordinary after two years.
• Clients Value Different Things More Highly Now. Generally, they value creativity, speed, simplicity, and full-integration. Their world has changed drastically and they have to make different decisions. Whether they’ll get these four things from their in-house team isn’t clear, but it is clear that they want these things. Impact. Give them something to buy and buy quickly. Be flexible, but flexible as an expert and not an order taker. And if you are a larger firm (>45 people), only work for clients who use you as a larger firm because that is your primary advantage. And all of you need to learn this lesson: unless you play well with the other 17 agencies your client works with (that’s the average), you’ll be replaced. Pick your battles carefully.

Why will private firms like yours always exist?

• Because Corporate Needs a Scapegoat. They can’t easily fire an entire department, but they can initiate a review and find a new firm.
• Because Incoming CMOs Will Demand Their Own Team. As they change jobs, they can’t swap out all the veterans but they can swap out the incumbent.
• Because Creativity is Inherently Wasteful and Rule-Bending. Corporate puts a process and timeline around everything. Any sign of life is squashed out by a bean counter or process expert.

Be sure to listen to this episode of 2Bobs where we talk about the real reasons why clients hire you, which they do even when they already have their own embedded marketing firm.