Brands Go It Alone in Social

It is a lot like digital circa 1997-2000, when companies were outsourcing the “Web thing.” But then it became so important that companies began bringing in heads of digital and other digital employees. In the end, it resulted in companies like Kraft, Pepsi and Coca-Cola having 20-30 people on their digital teams.

Outsourcing to agencies is expensive. If you’re a brand using one of the big agencies to handle social media marketing, you’re being billed between $100 and $250 an hour. That’s at least $2,400 a day and at least $876,000 a year for something that marketers are still figuring out and can’t prove ROI from. Let’s take it one step further. What about the CPG brands like Kraft, Pepsi and Procter & Gamble, which have dozens of brands? They’d be using the best agencies and would be paying at least $1 million per year to an agency handling social media, per brand. Bringing a social media person in-house would probably only cost $100,000, all in.

“I am thinking social media strategy, planning and insights will all move in-house for this reason,” said a brand executive who chooses to remain anonymous. “Agencies will be relied on for creative executions and helping brands stay ahead in the space. What I am hearing from our agencies is that they are thankful for our digital talent, because it becomes easier for them to sell their ideas to us. But I am not sure how long this happiness will last. There will eventually be a point where agencies see a revenue decline because so much is being taken in-house.”

Take Campbell Soup, for example. At one point the company outsourced the majority of its social media management. Today, the CPG brand has a social media chief (Adam Kmiec) and has taken social strategy, planning, community management, and analytics and insights in-house. The company continues to work closely with its agency partners to make sure social isn’t an add-on and that it’s part of how Campbell communicates with consumers. Kmiec, the director of global digital marketing and social media for Campbell, said that as the company adds internal talent, it sees better and more effective work.

“To be digitally fit, you need to be nimble and move at the pace of your consumers,” Kmiec said. “Right now, one of the best ways to do that is to understand your consumer. And to do that you need to have social hardwired in your organization. It can’t be an add-on or something you simply outsource.”

Digital agency 360i’s president, Sarah Hofstetter, said that bringing social media management in-house has its pros and cons. One pro is that the brand has complete editorial control and synergy with the rest of the in-house communications and creative teams. But there are also some cons.

“For one, you’ll never be able to discern a one-off glitch from a trend, whereas if you have a bunch of content and community managers sitting together, they can all see trends in consumer behavior, frequency of conversations with the social platforms themselves, and the trends on what helps or hurts Edgerank on a given day,” Hofstetter said.

Hofstetter admits, however, that some brands will move in the direction of taking social media management in-house, but that does still leave room for the agency to consult a brand in a strategic context, even though the activation is in-house. With the right foundation in place between the agency and the brand regarding brand values, mission and beliefs, Hofstetter said, an agency can be trusted to speak on behalf of a brand.

Scott Monty, social media manager at Ford, echoes Hofstetter’s point of view that agencies will always play a role in assisting brands with social media outreach. Ford has a blended model, where it has people in-house that work on strategy and then the company’s agencies handle blogger and influencer relations, community management and even some analytics.

“Determining whether an agency should handle your social media or not really depends on the level of trust,” Monty said. “How close are they to the brand, and do you trust them to be the voice of the brand? Whether you are using an agency or in-house staff, it is essential for the team to be as up to date or up to speed with what’s happening in social media. Sometimes when you just have a dedicated team in-house, handling it all, it becomes difficult to stay up to speed.”