Online Trading Academy in Irvine had just a couple of employees in its marketing department when it hired Rhythm Interactive to work on its digital advertising strategy in 2010.
The school, which offers how-to courses on trading for various markets, now has 17 staff members with day-to-day marketing tasks among their duties.
The arrangement reflects a trend across Orange County and the nation: Businesses big and small are beefing up their in-house marketing teams while still engaging advertising agencies for strategic guidance and other specialized services.
A quick look at local job ads reveals current patterns on in-house marketing: Ingram Micro Inc. in Santa Ana and Yamaha Corporation of America in Buena Park are looking for a marketing manager; Irvine-based CoreLogic Inc. needs a director of brand marketing; Oculus VR Inc., also in Irvine, wants to bring on an art director to “lead the creative direction and art development process for the Oculus brand, website, and product;” and Irvine-based disk drive maker Western Digital Corp. is looking to fill four positions on its in-house marketing team.
Survey
The local job openings appear to reflect a trend that shows up in data from Content Marketing Institute, a Cleveland-based marketing resource organization. A recent survey of more than 1,600 businesses showed that the amount of marketing and advertising material and content created by in-house staff rose 18% in 2012 from the year prior.
Larger companies are more likely to outsource marketing, although they’ve seen a shift, too. The survey showed that 65% of large companies—those with 1,000 or more employees—plan to outsource marketing services, down from 74% last year.
The shift can be attributed to several factors, including easier access to freelance talent through the Internet, the recent economic downturn, and discontent with agency performance, said Rhythm Interactive Chief Executive Craig Cooke, who also serves on the Orange County Advertising Federation’s board.
He said some clients consider agencies’ fees out of line with the services they provide.
“A lot of agencies tend to overcharge for what’s called logic—what is easily reproducible in-house, like 30-page booklets,” Cooke said. “But they undervalue and undersell the magic, the ideas, the tailor-made solutions, the way they’re executing the creative portion of their work, which brings magic to the table and better responses.”
Strides in digital advertising are creating demands to navigate the new marketing landscape, adding to discontent if results fall short of expectations. Some traditional advertising agencies that have not increased their technological capabilities are struggling to keep up with the changes, said Cooke.
“Clients are not getting results, so they are saying, ‘Let’s give it a go ourselves. Let’s build our own (shop),’ ” he said.
Filip Sees Increase
Andre Filip, chief executive of ELA Advertising in Irvine, which works with Verizon Wireless, Walt Disney Co. and Intel Corp., said he has also seen an increase in clients handling marketing efforts in-house.
One of his clients, Milani Cosmetics of Los Angeles, grew its marketing department from two to eight people in the past five years.
“[But] we are still handling the account as their [agency of record],” he said.
And Rhythm Interaction didn’t lose Online Trading Academy as a client despite the big increase in the school’s in-house marketing.
“They are starting to come back to us to help them on a strategic level, such as email communication, devising marketing strategy, creating templates, training on the platform and developing an implementation plan,” said Cooke, whose agency also does work for Amgen, Johnson & Johnson, American Airlines and Microsoft.
A Difficulty
Getting a good read on an in-house team’s effectiveness can be difficult, said Jim Harrington, president of the Newport Beach-based ad shop O’Leary and Partners, which represents In-N-Out, Oroweat Bread and the American Automobile Association, among others.
“There is a perception that doing things in-house is cheaper because you’re paying direct salary instead of agency fees,” Harrington said. “It’s hard to factor in legitimate return on investment, because you’re looking at the cost of work rather than the actual value the work will provide to you in the marketplace.”
Other challenges include keeping up with current industry trends, such as shifting buying behaviors, new social media platforms, changes in search algorithms and new software, according to a report compiled by John Bonini, marketing director at IMPACT Branding & Design, a Wallingford, Conn.-based marketing agency.
Quick Studies
The report went on to say that ad agencies tend to be quick studies, with staffers providing expertise in various market segments, allowing the shop to hit the ground running on a campaign.
“In-house teams are focused very vertically on one client and one industry,” Harrington said. “They don’t have access to creative people who work with a wide range of clients and can draw on those experiences.”
It doesn’t have to be an either-or situation.
Filip and Harrington said the majority of their large clients have well-established in-house marketing teams and also retain advertising agencies to complement that work.
The bigger the client, the more specialized its in-house team is, Filip said, as it will have enough volume for someone to focus on just one component, such as television advertising or print campaigns.
In-house marketing departments traditionally handle social media updates; support the customer relations department; provide sales support; make sure the sales team has all marketing materials; and manage customer relations, internal communications, or investor relations, Harrington said.
They can also serve as liaisons and work on strategy in partnership with an advertising agency.
“It’s better for us,” Filip said of the collaboration between the two sides. “You don’t need an agency to do social media updates eight hours a day. When it comes to strategic thinking, there has to be a symbiotic relationship between the agency and your team. Use the internal team for what they can do, and utilize the agency for their specialties.”
