Welcome to the Wheelhouse, a series of blogs from Ebiquity’s Marketing Effectiveness team.
Client & Proposition Director, Ryan Rooney, considers the pros and cons of running marketing effectiveness insourced, outsourced, or using a hybrid model in between.
My effectiveness journey started 12 years ago, when I was in the right place at the right time to set up the effectiveness team at leading UK insurer, Direct Line Group (DLG). With stop-offs at B&Q, Virgin Media, and my current home, Ebiquity, the question of what constitutes “the best” effectiveness operating model is something I’ve given a lot of thought to over the years, particularly as I’ve worked both advertiser- and consultant-side of the function.
Horses for courses
Clearly, every organisation is different. There are advertisers in the consumer goods sector that have a broad portfolio of brands and markets, where the modelling is relatively straightforward, while the stakeholder map is complex. Telecommunications and financial services businesses, meantime, may require more intricate analytics, but there is also – usually – a narrower and more focused group of stakeholders with whom these types of businesses need to engage. Looking across different sectors, I’ve come to the conclusion that there’s no single best operating model, but there are good and bad options.
In my experience, building an internal effectiveness hub to work with an independent, expert third party is perhaps the better solution. In this hybrid approach, the internal team not only briefs, oversees, and embeds the outside work. It is also able to integrate the programme with brand research, digital analytics, finance, and so on.
But with the promise of AI and automation on the horizon, building (or accessing) your own marketing mix modelling (MMM) is a goal to which more and more advertisers are aspiring. It’s a very hot topic in the industry and this requirement is featuring more often in the briefs we receive.
Let’s start by considering the appeal of insourcing. To start, you have visibility of the whole process, from data extraction and modelling to the outputs. Also, you maintain tighter ownership of the intellectual property. What’s more, you control your own resourcing and there’s also the possibility of a lower cost base.
In practice, however, many client-side teams find that delivering the full suite of modelling, forecasting, and optimisation is harder than it seems. Here are six of the most common challenges.
1. Leadership: an internal marketing effectiveness programme can struggle to boot up unless you can find one or two practitioners with strong communication skills who have lived and breathed MMM for several years already. You need a team with gravitas and the experience to influence key stakeholders and drive change. These people can be hard to find.
2. Being a prophet in your own land: it can be easier for external consultants to turn up and say something very similar to what the internal team has previously said, for the internal team’s words to be dismissed, and for the consultants’ words to be believed and acted upon. It’s not always the case, but this can be a big obstacle that internal teams must overcome.
3. The learning-by-doing gap: consultancies have a huge head start simply because of the volume of work they do. Smart tricks are replicated, and know-how is shared across a pool of people who do similar work across a wide variety of contexts. Productivity continuously grows through knowledge spill-over, not a single, technical breakthrough.
4. Retention: we’re all battling to retain our talent in this market, and this can be more acute client-side, as colleagues may not get the variety of development opportunities they crave. The common client-side grumble I experienced was that MMM is like painting the Golden Gate or Forth Rail bridges. No sooner have you finished than you’re back at the start again.
5. Continuity: while account churn is annoying from a client perspective, a small internal team of marketing effectiveness practitioners is actually much higher risk. A few resignations can leave you without anyone to update and interpret the models left behind.
6. The tools arms race: now more than ever, this is a competitive and evolving space. With investment in data science capabilities strategically non-negotiable. The need to continually develop re-usable tools and advance automation is one of the things that makes the cost advantages of insourcing over outsourcing most difficult to achieve, it’s no longer just about modelling.
Thinking about some of our most impactful partnerships, many of these are working towards a hybrid structure, aiming to leverage the best of both worlds. This approach brings together the internal know-how and stakeholder influence with the external capabilities and expertise. The spectrum of different operating models for marketing effectiveness and key considerations for each approach is summarised in the table below.
|THE EFFECTIVENESS OPERATING MODEL SPECTRUM|
|Complete insource||Harder than it looks, but achievable with enough resources and the right people (the best example in the UK is probably Sky). This model can require significant investment and depends on your ability to acquire and retain great people.||Medium to large originations, with 4-5 FTEs for a medium brand and 6+ for a larger company with a portfolio to model and manage.|
|Hybrid insource||In this model, the bulk of analytic and data work is done internally, and the external partner is used as a provider for tools or for ad-hoc support.||Smaller organisations with a modelling challenge that is on the simpler side, but most importantly, with the right people to manage the models.|
|Pure hybrid||In a pure hybrid model, you have an internal team capable of building and interpreting MMM models. It is characterised by relatively fluid handoffs of tasks between internal and external resource, as if operating as a virtual, single team.||Depends. Can work well for smaller-to-medium-sized companies or those with a more modest portfolio. In this set-up, often see external resources deployed within the internal team|
|Hybrid outsource||My favoured approach. The role of the internal team is to engage with stakeholders, steer the ship, and act as a coach to the consultancy. The internal team often looks after forecasting and business planning, while the external team typically has responsibility for updating and delivering the MMM.||Medium to large organisations with a portfolio of brands and/or products. Sits well within an insight function that also oversees the broader research and analytics agenda.|
|Complete outsource||Wholly owned and delivered by the consultancy. This is often where smaller organisations land, as the resources don’t exist to support an internal marketing effectiveness team.||Smaller / start-up organisations with limited internal insight / analytical resources.|
Wherever you aim to sit on the spectrum, the key to success is alignment and agreement on the roles and responsibilities for internal and consultancy team members.
A cover-all checklist
There’s no better time for an advertiser to review and reset its marketing effectiveness operating model than when pitching for a new partner. Here’s a helpful checklist of questions you should consider at this point. Download here.
Where should the marketing effectiveness team sit in the organisation?
I remember well that, during a particularly hectic six months client-side, my “Head of Marketing Effectiveness” reporting moved three times – first from Marketing to Insight, then from Insight to Commercial, and finally full circle back to Marketing again. Apart from feeling a bit dizzy, on reflection I concluded that – with the right people and capabilities in place – it didn’t really matter to which teams or individuals we reported to. The recommendations are the recommendations. That said, who sets the agenda can depend on who is asking the exam questions.
The CMO will ask you to prove the case for marketing investment, while the CFO will also ask you to prove the case for marketing investment. They are likely to come at if from different angles and be looking for very different answers.
This is why independence is key. An internal effectiveness team should be empowered to tell it how it is, irrespective of where or to whom they report. They also need to be able to give a balanced view. If asked to prove the case for marketing investment, they need to consider both the short-term and the long-term, both the average and marginal efficiency; they need to tell a story that brings stakeholders together around a common truth that informs decision-making. Noble aims can be undermined if the internal culture is overtly political.
So this brings us back to people, irrespective of the operating model. Success starts and ends with having the right people and personalities in place. Objective, credible, commercially-capable individuals who can engage stakeholders and influence decision-makers – as well as nurture the same skills in those around them. It doesn’t matter if these people are client- or consultancy-side. If they’re truly impactful, they are the key that can unlocks a successful marketing effectiveness culture and function.
Feel free to get in touch with the Ebiquity team to further discuss these important updates and take proactive steps to reduce wasteful practices. Reach out now.