How to Avoid In-Housing Purgatory
Facing a macroeconomic downturn, many brands are going to learn that their efforts at in-housing technology did not go far enough
What is in-housing purgatory? It's when companies are stuck half-way between building media technology and buying it. Many organizations have only accomplished a middle state where they have hired a few employees to become power-users of certain platforms, and where they have perhaps added a superficial layer of UX on top of those platforms and technologies.
This purgatory state actually isn't producing a ton of efficiencies. And when margins are thin, times are tough and every dollar counts, a lot of companies are going to realize that they're in this position.
In-housing purgatory is characterized by:
- Friction: Increased operational friction and stress deriving from having to do things yourself, which impedes efficiency.
- Diminished Scalability: It's tough to scale sales, marketing, or other operations strategically when you are hampered by limited internal resources.
- Poor Agility: Expansion into new channels is now limited by the capabilities of in-house teams. the omnichannel imperative, requiring fluency across platforms and formats, is hard to answer without the help of a fully integrated solution
Why is this happening? One reason, unsurprisingly, is economics. Cobbling together different solutions across functions like media sales, operations and reporting is often cheaper than employing one comprehensive solution. This is especially true as different needs present themselves organically at different times, leading to disjointed adoption and ramp-up between teams.
This type of synthesized tech stack bogs down efficiency on multiple fronts. Every vendor promises interoperability, but data silos invariably spring up and require labor-intensive workarounds. Different team members become more comfortable with different systems, and the resulting friction becomes a financial and operational burden.
These details are not priced into the technology when looking at balance sheets.
Some brands that spend huge sums on media buying can afford to truly build technology in-house that satisfies their needs, if they have the requisite talent and motivation. However, the resources required to make it happen are beyond the reach of most businesses. In trying to forge a middle path, many media sellers encumber themselves with these Frankenstein-esque tech stacks that cause more problems than they solve.
Companies should consider this factor when considering their media technology needs: Call it the "BS Coefficient:" There are costs associated with each loose end, data source and functionality that must be tied together to realize meaningful returns on media spend. These costs aren't immediately apparent when sizing up the costs of technology but recognizing them is essential to success.
Broad-scale economic headwinds are top-of-mind across the business world at this very moment. When every dollar needs to stretch further, companies don't want to find themselves suddenly grappling with legacy inefficiencies in their media operations.
Too many organizations are likely to land in this position in the coming months and years, especially if a significant recession sets in. Coupled with evolving regulatory and market conditions, shifting consumer behavior and sentiment, and ongoing uncertainty in the wake of the pandemic, now is the time to make smart investments that will pay off in the long run.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Tom Cheli is the CEO of Frequence.