When it comes to advertising, should you go in-house or work with an agency?
Armin Molavi, a Strategist-for-Hire with a unique hybrid of brand, digital, and media expertise, is here to weigh in.
He’ll answer the advertising questions brands face, including:
- How do you know if you should outsource your advertising?
- What are the trends of in-house advertising?
- Where should CMOs start with in-house advertising?
- How to make hiring decisions
- Tips for finding the right agency
- And more
Mentioned in this episode:
Transcript
Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I'm your host, Steffen Horst. The topic for today's episode is in-housing advertising versus working with an agency. Here to speak with me is Armin Molavi, who is a marketing strategist for hire who built solutions that drive performance. Armin has a unique hybrid of brand, digital and media expertise, and never backs down from a challenge either professionally or personally. He ended his 18 years agency run as North America Head of Strategy at Havas. From there, Armin was the Global Head of Media Strategy for the full Hilton portfolio, where he rebuilt the 7 billion acquisition engine and launched a global segmentation for Hilton Honors. He's now strategist for higher helping CEOs and CMOs to pivot their companies through tough times. Armin, welcome to the show.Armin Molavi: Thank you. Thank you for having me. Excited to be here.Steffen: Armin, before we start exploring today's topics, tell our listeners a little bit more about yourself. How did you get started in a career? And what led you to now working as a strategist for hire?Armin: Yeah, it was. I was working at Boston Consulting Group, I had a really great time there. But I wanted something different. And I got a job at Strategic Interactive Group as an administrative assistant, actually. And Strategic Interactive Group is now Digitas. And it was funny when I accepted the job. And I told my parents, my mom asked me what they did. And they said they build websites. And her response was the Internet is a fad. And it's gonna go away quickly. So are you sure you want to do this just for context as to when I started. But I was really fortunate in working at two great agencies for over almost 20 years. You know, working with amazing brands like American Express, Hilton, Choice Hotels, you know, General Motors, at P&G, and had a really great time. But as life turns, I had an opportunity to go over to Hilton, which was an amazing opportunity, fabulous organization. And really spent a lot of time there with really understanding consumer, understanding the needs of consumers. Just recently, Hilton announced a brand new brand called Spark, which was entirely developed off of the global customer segmentation that we built while we were there while I was there. And so it's really exciting to see marketing strategy come to life, you know, in the real world. But what happened was, I was traveling about 140 nights a year, at the time, my kids were turning like four-ish, they started noticing that I was traveling too much. And so I decided to leave and start consulting. And so over the last three years, I've figured out that I'm really good at fixing big problems that CMOs CEOs have in house and don't necessarily have either the right expertise or the right bandwidth to solve for. And so I've been doing this, you know, these gigs, and it's been great. Like Mattress Firm, I had a really great time helping them navigate COVID. Obviously, as you can imagine, they did not have a significant e-commerce platform before COVID. And so helped them with that. And now I'm helping a number of other companies with how to reevaluate their value proposition and go-to-market strategy. And from there, how do you staff against the strategy that you want to execute? You know, as you know, talent is such an important resource. And figuring out the right mix between what should be in-housed, what should be outsourced, what should be at an agency, who should be freelance is just a really big question. And quite frankly, almost as important as the strategy itself.Steffen: Yeah, yeah. And there are a lot of people out there that have different opinions on that topic, right. In-house everything, outsource everything. So today, we're going to talk about, as you said, should I inhouse all, parts of it? Or should I outsource everything, parts of it? So that's what we're going to talk about. Let's start with how are the in-house and outsourcing trends moving when it comes to advertising?Armin: I think there's a couple interesting pieces going on. I think that there's been quite a big movement to in-house parts of the overall advertising value chain. I think the media transparency issues that we saw a few years back kind of started the questioning of like, should I really be doing my media with an agency, if I don't really know where the money is going. But I also think, on the creative agency front, you know, creative agencies for the last, you know, five or six, seven years were really struggling with, what is the business model that is going to be successful for them to drive profitable growth, but at the same time, have a meaningful, robust relationship with clients. And, you know, the notion of agency of record started to like waffle a little bit, not everybody necessarily wanted to do it. You know, I know a lot of CMOs were worried that, you know, AOR relationships were leading to creative agencies, media agencies not trying their hardest. And I think that that's a very pessimistic view. I think that, you know, when brand side folks have a real understanding of how much energy and effort it takes to win a new piece of business, I think you realize very quickly that your agency team is usually way more committed than the brand usually thinks. But what I think is, you know, I think much like many of the topics in advertising this in-housing versus, you know, outsourcing model, everyone has been coming at it, from the very kind of extreme views. I really don't believe that 100% in-housing model is correct. I don't believe that 100 person out-housing, you know, outsourcing model is correct. It really comes down to what parts of the business are most important to your company's culture? And what parts of the business do you really need help with? You know, I think that you're looking at a P&G. You know, for so many years, P&G was a firm believer in, we're really good at developing products. We're really great at developing brands, but we are not the best of the best at creating ads, creating media strategies. And so let's outsource it. And they were really, really good and maniacal about that focus. And I think that's, you know, part of their success, obviously.Steffen: Yeah, yeah. And I think another, I always think another point is missed in that discussion, which is the size of the organization. You know, when you see startups, they tend to, especially in certain areas, technology, SaaS, etc, they tend to want to build out in-house teams, which, a full in-house team, which always kind of gives me the chills a little bit, because, at least in my opinion, if they're well funded, they might be able to build out a team of several people that have specific competences in different areas that they need. But in most cases, they are able to hire maybe one person. And then that one person is supposed to be the strategist, the branding specialist, the paid search specialist, the SEO specialist, the Facebook specialist, and we go on with that. Right. So we then talk about generalists that know things, but they're no expert in any of these areas. Do you see that issue only with smaller and midsize companies? Or do you see that across the sizes of companies?Armin: I see it across all the sizes. I think what's so interesting when you bring up startups. You know, I was consulting with a startup who they were really struggling with, you know, brand, value proposition and target audience, all this stuff. And they wanted to hire a CMO. But the reality is, they didn't need a full-time CMO. You know, they needed a, they needed a strategic leader. But that doesn't mean you have to hire someone full-time. And the irony was, at the same time, they wanted someone to run paid search, go into Google Ad Manager do all these things. Again, they didn't need a full-time person. And the funny thing to me is this, like resistance to part-time relationships. You know, you can solve so many problems, if you really let go of this idea that people have to be full-time. And I think that's a big solution that's often overlooked for these smaller companies. What I think is interesting about the larger companies is, you know, you have this, like, let's call it midsize company, spending 15, 25, $30 million in media, or $40 million in advertising costs. The reality is this, you don't need a full-time team at an agency. So that means like, the resources you get from an agency are going to be half allocated to you. And you have to be flexible with that, right. Like there's nothing wrong with that, you know, nothing is happening in our industry that like demands, you need to have access to your account lead or someone on your agent side 24/7. And if your company is really in that kind of state, there's much bigger problems. Like no ad agency is going to fix that. And so I just, you know, and I think what's interesting is, you know, then when you get to the really large, right, like, whether it's a Hilton or you know, some of these insurance companies spending hundreds of millions of dollars. Global businesses, right. The question really becomes, can you staff it, can you build it in-house and build it in-house well enough to say that you're gonna get as good of an output as you would get from an agency. And I think that's the question.Steffen: Yeah, yeah. And I think that's a great question to ask. Now, let's assume I'm a CMO that wants to in-house, what should I be thinking about? Where should I start?Armin: I think really, you know, the first one is a really basic question that you have to have with your HR lead, right? Like, do you have access to talent? You know, there's, there's certain cities for marketing, for example, that the talent is abundant, right? You look at an Atlanta, there's so much amazing talent in Atlanta. And on top of that, from diverse industry, if you've got Coke, you've got Home Depot, you've got hotels, like so many interesting categories there that finding really great talent is likely. You go to a place like Miami, Miami is an awesome city. But the marketing talent is not as diverse from a skillset standpoint. You look at, you know, I had a client in Phoenix, and they had all of, they were trying to build all of programmatic in-house, but they couldn't get the talent. And even with Hilton, you know, what was just so interesting was, you know, as you know, I live in Boston Hilton's, based in DC, the greater DC area. DC is a tough town to recruit people to move to. You know, especially when you start thinking about like, okay, if I'm going to build a programmatic platform, for example. Most likely you're looking for some younger talent, that talent is most likely single, you know, looking to mingle, looking to have like robust lives outside of work. DC's a tough town, if you don't work in government. So like, you could be a big enough company, but just even your geographic reach, just could be an issue in regards to building something in house. And I think people often kind of miss that. And I think the other thing that a lot of companies are starting to contend with is return to office. You know, I know here in Boston, commute time is not awesome. And so if you're saying, you know, if you want to have some kind of hybrid return to office model, three days a week, etc, you know, can you build a value proposition for your staff to overcome a one-hour commute in each direction? You know, that's not uncommon in Boston, it's not uncommon in New York. And, you know, if you really think you need that team in-house, in the office on the ground, do you have the value proposition there to really build it? You know, and so I think there's a lot of like, very functional things that I know it doesn't sound sexy, but you have to contend with some of these elements?Steffen: Now let's assume you, you've gone through that, or I've gone through that, as the CMO. How do I make a decision on who to hire? So let's take the do I have to have the people in the office, or can I hire people remote? Let's take that off the table for the sake of this discussion. How do I identify who I need to hire first, that helps me? What should I look for to make that decision?Armin: I think one of the most important things is what parts of your company culture do you want to have the most access to? So for example, you know, there's a there's an insurance company in Ohio, massive organization, massive media budget. You know, they're actuaries. You know, this is an entire business modeled on, you know, likelihood to get into a car crash, and really understanding, you know, the value of people. They want to have extremely close access to all of the data around the media. So it makes sense to bring in the acquisition business, it makes sense to bring in programmatic, it makes sense to bring in lower funnel. You know, and I think that for a company that is so data-enmeshed like an insurance company, bringing in that part of the business makes the most sense. You know, I think that when you're a CPG brand, that may not need as much access to data it may not make sense. You know, and I think if you're a D2C, if you're e-commerce, you probably do need to bring it in-house. But I think the other piece is, you have to think through what are you going to do with this talent once they're in the building? Because they are going to want to have career paths. And the question becomes, like, can you build career paths, like if you're gonna, again, like, let's stick with programmatic. If you're gonna bring in all these, you know, programmatic traders, you know, at a certain point, they're gonna want to get promoted. They're gonna want to get paid more, and you're not an agency model. You're not charging people hourly fees for these folks. So you can't just easily justify the cost for increased comp. So what is the career path for them. And if you don't have a successful strategy, a robust strategy for their career paths, these people are going to quit. And then you're going to be stuck. You know, what are you going to do when the guy running your paid search quits. Gives you two weeks’ notice. You know, you're all of a sudden gonna lose a lot of efficiencies, you're gonna lose a lot of, you know, in-house knowledge. And so you start begging the question of like, does it make sense for us to be doing this in-house?Steffen: I think that's, that's a great point. And I see that even on the agency side, quite often, that there are agencies, that think I want to build out a certain capability, let's say on one person, and all of a sudden I have a team. Well, one person doesn't make a team. And in a competitive market, like these days, and even a few years back it was very competitive, that one person might disappear tomorrow, or in two weeks, as you just said. And then all of the knowledge that was within your brand is gone. And the person that comes in once you find that person, and that's not going to be easy. So you will have to find a way to bridge the gap. Once that person comes in, that person will have to start collecting all the knowledge, again, literally starting almost from zero. If there is a good documentation in place, it might not be zero, but in most cases, that is the situation, they will have to start from zero. So it's not just the cost of hiring a new person, it's also the cost of getting familiar with the business, etc. And that kind of almost points to, you know, if you want to in-house things, I hate to say it, but for smaller companies, even startups, it might not be the best way, period.Armin: Yeah, I think for the smaller, you know, for smaller companies, you know, obviously, there are boutique agencies. And I think there are amazing, amazing boutique agencies. I can rattle off a ton of boutique shops in Boston that are phenomenal for small brands, small businesses. But I think, you know, in-housing, it is just really tough when you're small. You know, you lose that one person, it just, you know, it falls apart. I do think that people are overestimating or are under are not investing enough time and looking at part-time model. You know, I think that there's a lot of really phenomenal people out there that bring so much skill to the table. And when you think about someone who's part-time, you're giving them flexibility that they're not necessarily getting from the rest of the job marketplace. And that flexibility means so much to them, that they're going to love being a part of your company even more. You know, and I think that it's the part-timers is something that a lot of companies are not investing enough time in as a solution.Steffen: Armin, why do you think that is?Armin: I think part of it is control. I think part of it is, you know, uncertainty of like, oh, well what if you know, if this person says they're only working from like, 10 to three, for example, like, stay-at-home mom who wants to, you know, be there for their kids. You know, I think people worry like, oh, what's going to happen if like, it's 4:30 and I want to ask them a question. You know, or they're going to, you know, or someone who says I'm only going to work Tuesday, Wednesday, Thursday, what happens on Friday, what happens on Monday? And I think that, you know, I've been in so many of those situations. As the colleague, I always worked full-time when I was at the agency, but I worked with so many people that work part-time work four days a week. And I never saw that obstinance of well, I don't work on Friday, so I'm not going to talk to you on Friday. And the reality is, they are just as committed, if not more, for very, you know, for differing reasons than someone full time. I think people just need to, you know, get past it. I do think that there are right ways and wrong ways to do it. You know, there was one point in my career, I worked for a job share where two people split one role. One of them worked Monday, Tuesday, Wednesday, one of them worked Wednesday, Thursday, Friday. And it was really hard for the team to constantly be pivoting back and forth between these two resources, and these two leaders. I just don't, it didn't work from like a comm standpoint. No one really knew, like, who to email who to ask questions about like, should we wait for so and so to come back on Monday because I started this conversation with them on Wednesday. So I do think that there are some models that don't necessarily work as well. But I think you know, saying that part-time doesn't work because you had one bad experience is just as bad as throwing the baby out with the bathwater. You know, there's there's ways to make it work. And, you know, for the people who want to try and figure out how to make it work. I think the easiest way to do it is to find part-timers, and just ask them, like how do you make it work? You know, because if you're a startup and you really need a brand strategy and you want someone for the duration. You could get someone to, you know, I'm sure there's tons of amazing marketing talent that would love to work with a startup part-time. Startups postpone hiring CMOs forever, because they don't know when they can afford it.Steffen: Sure. Yeah. Now, you talked about, I think cost earlier. From what I hear, from what I read, cost is always a big point in this discussion in-housing versus outsourcing, right. You talked about transparency. I mean, we're both of us used to work for big global agencies that used to have programmatic departments. And, you know, there's always the question around as it is kind of an opaque approach, how much are they actually keeping? And how much ends up on the screen? Right. And that kind of, as you said, also fueled that in-housing a few years back. Now, as it relates to making a decision, in general, how should companies look at that from a cost perspective? You know, they might say, hey, if I save costs, by having people in-house, even if it's just one person, for each of those activities, is there something that speaks against that experience of the people, et cetera?Armin: I think that there's going to be a couple things. I think, one, I think, when you're looking at it purely from a cost standpoint, I think companies underestimate the inefficiencies from, you know, losing talent. You know, those things that we talked about earlier. I think the other interesting thing about, the other interesting thing that you lose, is you don't get access to the different ideas that are floating around the agency. Obviously, the agency is getting exposed to lots of things. But again, you know, much like the startup, you know, even when I was at Havas, I'm sure the same thing with you, when you were at, you know, your tail end of your career on the agency side, you don't need 100% of the North American head of strategy on your business. That was my role. You need me 10% of the time, 5% of the time. Right. And you don't need to hire me in-house. You don't need me there 40 hours a week. Right. And so I do think that, yes, if you go title for title, of course, it's going to look cheaper to hire people in-house. But I think when you think through all of the elements, you know, you get to this place where I don't really think the cost differential is as big as people think. Don't get me wrong, it's going to be more expensive. These agencies are not nonprofits, they're not doing this charitably, right? Agencies, you know, they have their holding companies, they're there to drive a profit. You know, the question is, like, do you know, what is the right profit margin to be paying agencies that you think is fair, that's worthy of the work quality that you're getting? And I think that's part of, you know, part of the issue is I think that, you know, there's a little bit of buyer beware, and a little bit of, you know, education, right. You as the client, need to really understand, you know, what is the cost model of your agency? What is the structure? How are they, you know, compensating their people? What's the, you know, what's the profit margin, is there a risk-reward component for the agency? Which, personally, I think is a must for every agency relationship. And I think that if you structure it the right way, you know, yes, you will be paying them a little bit more than it would have cost potentially, for you to build it in-house. But I do think that there's a lot of other benefits that you're going to get, if you've decided that outsourcing is the right answer.Steffen: So now we've decided that in-housing is the right answer. Any tips on finding the right agency? What is a good approach there?Armin: You know, I, finding a great shop. You know, the, I would argue that the pitch process in advertising, whether it's for creative or for media, or you know, for any of the other major specialties, I would argue that the pitch process is wildly broken. I think it's broken, both because of clients, as well as because of agencies. I think that topic warrants a whole podcast in and of itself. But I think if you put the process aside, you know, I think there's a couple of things you have to really think through. I think, one really simple do you need them there to be physically in your office? You know, I've had some clients that we're like, yep, we want you around the corner. Great if that's the way your company operates, and I know that sounds so strange in this day of like work from home and COVID and all that. But you know, there are some companies that just don't do well in that environment. And I think you just have to be honest with yourself about that. But I think the other one, the other, I don't know if I call it a mistake or thing that people overlook is you know, you participate in these agency searches, you see all this great work that the agency is doing. I don't necessarily know if people or brands and clients are asking themselves the question, can I actually buy the work that this agency likes to do? You know, you, you're going to sit there in these presentations, and they're going to show you case studies, they're going to show you reels, they're probably going to show you sample ideas for your own business. And, you know, obviously, it's going to be the best work they have. It's the bells and whistles, it's the most exciting work. I think you have to be really honest with yourself, can I as the CMO say yes to this kind of work. Can I, as the CMO, sell this work in to my colleagues. You know, if you can't, then that's not the right agency for you. You know, I used to, you know, I mentioned earlier as a part of the Havas network, you know, Arnold worldwide, amazing shop. Havas worldwide amazing shop. You know, I had someone once come up to me, and they said, like, you know, if you had Arnold and Havas in the finals, like, which one would you pick? And I, my answer to them always was if you have Arnold and Havas in the finals, you don't know what you're looking for, because they're two completely different agencies that do very different kinds of work. You know, and so I think that, like, you really have to be very honest and clear with yourself to say, can we as a company, say yes to this kind of work. Because if not, they're not the right agency for you. And you know, the old adage of like, you know, people tell you who they are, you should listen to them. It's true with agencies, they're gonna show up, they're gonna show you the best work. That's the work they want to do. So if that's the work they want to do, and it doesn't match up with what you want to do. It's not the right shop.Steffen: So I found an agency, that agency is great. I think I made the right decision. How am I going to make it work? How am I going to get the best out of them? How am I going to get the agency to put their A talent on my team?Armin: This is the biggest mistake that everyone makes. Once the pitch is over, and you have selected your agency, the balance of power has shifted, because you went from the agency competing for your business. But now, you are competing with all the other clients in that shop for the best talent in that building. Because the reality is, the best people at any agency, no matter what agency it is, no matter what kind of agency it is, the best people in that agency can flat out say no to any assignment. And if you the client, never say yes to bigger ideas, if you the client are constantly, you know, writing bad briefs, or giving bad direction or constantly changing your mind. People aren't going to want to work on your business, the agency isn't going to look at their top talent and say to them, like, oh, we know you really don't want to work on Company X, but we really want you to. They're not going to risk losing that person. You know, I, some would argue that I did well at Havas, right. I was there for a while, I won quite a bit of new business. I won the largest pitch that the agency had won in 10 years. And I said no to clients a couple times. You know, there was one client, I just didn't, you know, I wasn't interested in the category, there was another client, you know, just didn't feel right to me. There was one client that their values as a company just didn't sync with mine. And I just couldn't bring myself to work on that business. There's no way the CEO of my agency was gonna force me to go to Chicago to work on that piece of business. You know, and I think that this is where clients, really, you know, kind of miss it is, if you're not an awesome client, you're not going to get awesome work. If you're a client, you know, like, think about it even with like the media agencies, all the content platforms. You know, Google is going to show up to your agency, and they're going to say, like, oh, we have this brand new beta, can you bring one or two clients to the table so that we can test it out? They're not going to bring the client that is so difficult about everything to that meeting. And I will also say like, you know, going back to the pitches, you know, these pitches that are led by procurement, which don't get me wrong, there's nothing wrong with procurement. But when procurement is leading the pitch and the sole goal for procurement is to like squeeze the agency margin so hard, you know, again, going back to cost if you squeeze the agency so hard that they're barely making money on you, they're not going to go above and beyond to try and like dazzle you. Why would they do that? It doesn't make sense. You know, and so I just think that being like writing great brief, I think brief writing is so underappreciated. Writing an amazing, brief, crisp, one-page, the company is aligned, is such a, you know, it's a skill that is not prioritized. Giving good feedback, right. Like, inspiring the team to do good work. It's gotta get you much better output from your agency in the long run. And, you know, again, that's the other funny thing you talked about, we were talking about cost earlier. You know, you don't want to get to a place where an agency resigns your business. I've been a part of that, too. Like, we weren't making enough money on the business. Why am I going to put 20 FTEs on account? On an account that I'm driving no margin? No CMO would put, you know, like, no CMO would put 20 FTEs against a business idea that they don't think is going to drive profit in the future. Why would an agency head be any different?Steffen: I think a lot of businesses, and a lot of businesses forget the fact it's a relationship at the end of the day, right? Your personal relationship, whether it's your wife, friends, you name it, with your guys, you go out and play, I don't know, soccer, football with. You treat them fairly and nicely. If you don't treat your agency, the one that you selected, that you hired for reason, in a nice way, then you cannot expect them to go above and beyond and, you know, air quotes kill themselves to deliver great things for you. That's just the reality.Armin: Yeah. I mean, you know, it's so funny, you said like relationship. I have said, so many times, like brand/agency relationship is no different than marriage. You know, my husband makes me a better person, full stop. I think I'm pretty sure I do make him a better person also. There's no difference with your agency. Your agency should be pushing you to be better, you should be pushing your agency to be better. And it should be done in a healthy way. And it should be done in a way that excites everybody on both sides. And, you know, marketing is an additive skill. Like marketing is all about creating value. If you're walking into your agency with this, like reductive mentality of like, how can we cut corners? And how can we this and how can we that, you're not gonna get anywhere.Steffen: Well, Armin, unfortunately, we've come to the end of today's podcast episode. Thank you so much for joining me on the Performance Delivered podcast and sharing your thoughts on in-housing versus outsourcing. If people want to find out more about you, and how you might be able to help them with their marketing challenges and needs, how can they get in touch?Armin: First of all, thank you so much for having me. It's so fun listening to your podcast, and being a part of it is, is a great experience for me. So thank you so much for having me. And as it relates to finding me, the joy of having a name like Armin Molavi is I'm pretty easy to find on the internet. And the best place to find me is LinkedIn. When you're only one person, you can only allocate so much energy to so many things and so I still, cobbler's children have no shoes. I still have yet to build my own website, so the best place to find me is on LinkedIn.Steffen: Maybe you should hire a freelancer to do that.Armin: Maybe I should hire. Maybe I should outsource that. That's a great idea.Steffen: Well, thanks everyone for listening. If you like the Performance Delivered podcast, please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Thanks again and see you next time.Voiceover: Performance Delivered is sponsored by Symphonic Digital. Discover audience-focused and data-driven digital marketing solutions for small and medium businesses at symphonicdigital.com.
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