In-Sourcing and the Value of Disruption – Part 1

Disruption

The recent move by Krispy Kreme to take their digital marketing in house (http://www.adweek.com/agencyspy/krispy-kreme-takes-all-its-marketing-in-house/88633) continues a long-standing debate about the relative value of in-house versus agency resources for these essential services. In considering this question, a statement by Krispy Kreme about their decision stood out to me as worthy of examination: “Krispy Kreme engaged VML last year to do strategic and foundational work in the areas of digital and social media.  We think that those efforts have set us up for success going forward. As such, we plan to manage digital and social media using in-house resources at this time.”

I expect that statement is half right. VML does great work and Krispy Kreme clearly has a strong strategic platform to work from to deliver digital and social media programs in the short term that will help them drive business. But how much a foundation of success they have “going forward” is an open question, and one that is important for every modern marketer to answer.

Krispy Kreme’s particular situation is simply one of many companies choosing to take critical marketing and communications functions in-house. It’s useful to consider the advantages and risks of such a decision and to, hopefully, identify ways to maximize the advantages and mitigate the anticipated risks.

The Pros

The advantages of taking ownership of digital tasks in-house should be clear. Beyond the (often exaggerated) economies, the key advantage of bringing digital responsibilities in-house is that the ownership and accountability of these critical mechanisms for delivering customer service and marketing messaging are clear, and metrics of success explicitly spelled out. This focuses internal digital marketing and operations teams and provides the avenue for developing real knowledge and empathy with their target customers – a fundamental ingredient of great work.

The Cons

On the flip side, retaining an outside team for key digital responsibilities also has some obvious advantages in the highly dynamic online environment. As the most critical interactive skills have evolved from experience design to media planning to search to content marketing to programmatic, corporate marketing departments have easily switched among agencies whose capabilities better matched the challenges of the day (to the dismay and occasional demise of less nimble agencies). The minimal agency switching costs and hyper-competitive nature of the interactive agency world allows corporate digital departments to adjust to fluid demands in interactive capabilities more easily than they might be able to with embedded resources.

In short, for various reasons the interactive world has been one of constant disruption since its inception. While the environment has been demanding for modern interactive teams, the one clear beneficiary has been the customer. Websites are more intuitive and visual than they were, search gets better and better at connecting customers with relevant offerings, and content (of all forms) has become richer and more effective at telling brand, product, and service stories in ways that are meaningful.

The strategic work we do at Ambility aims to help insourced and outsourced teams focus on high-impact solutions and manage operational risk. We’ve worked with our corporate clients to evolve platform offerings and campaigns to better connect with customer expectations, and we’ve helped agencies adjust their capabilities to better match client needs.

In each case the driving inputs are insights which help us understand how technology and social factors are impacting customer behavior. Understanding how customer behavior is evolving then allows us to better understand what is working, and to uncover new opportunities for brands to stand out from the competition. But each time we recognize that the delivery provides a solution for the current environment – an environment that continues to evolve and be disrupted.

Increasingly we work to organize teams around customers in order to be better at identifying changes when they happen, and to better understand capabilities gaps that need to be filled. Where this post sought to outline advantages and disadvantages of doing this in an insourced world, the next post will provide thinking for how to operationalize disruption within an organization.

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