by Jim Boldebook
In-House vs. Out-House Advertising
Twenty five years ago a dealer client of the ad agency I founded told a friend that he had two advertising agencies…in-house (and as he pointed to me) and ‘outhouse’. I always thought it was pretty funny. I often told my friends that we were an ‘outhouse’ agency where all the BS originated. But seriously, there are good reasons for having both in-house and out-house in a dealership. In-house can be a part-time job for a small dealership or a marketing manager and staff of several for larger operations.
In-house marketing is in a unique position of daily interaction with both the dealership team and customers.
In fact, I believe the ‘CMO’ (Chief Marketing Officer) should report directly to the dealer on the same management level as GM. A dealer operator needs to have complete clarity on marketing challenges and opportunities without filters. Too often management will scuttle an idea because it is inconvenient or creates extra work. The best dealers I know want to hear all ideas. Because often those ideas, especially new and unproven ideas, give the best competitive advantage for that very reason.
In-house folks are in the best position to recommend and oversee the customer first experience. In-house marketing can interface with dealer and management to gain important insight into targets and goals. From there, they convey those insights to the out-of-house professionals.
One of the best in-house marketing managers I know got her job by approaching the dealer principal with a proposal for her job. She had no marketing experience other than her role as a real-estate agent. She told the dealer she could be instrumental in creating a welcoming, friendly atmosphere throughout the dealership. That her good taste in design could help insure advertising met both dealer and customer expectations and keep advertising expenses within budget. She has now been with the dealership for 15 years. The dealer tells me she is one of the most important members of the management team.
Having an ‘Outhouse’ agency is important on a number of levels.
Mostly importantly, new ideas from outside the market. Too often dealerships within a market area chase each other’s tails. Success stories from other markets can help break through the clutter. As the founder of an agency with clients throughout North America, I’ve always believed that there is strong benefit to working with an auto marketing specialist who has no other clients in the market of the dealer represented.
First and foremost is objectivity. Often local ad agencies (and in-house marketing people) can be ‘bribed’ by local media. Not necessarily with bags of cash, but just the consistent goodies like restaurant meals, game and entertainment tickets, clothing, etc. Good media salespeople know how important it is to establish ‘personal’ relationships with local buyers. I know. I use to sell media. And it isn’t just in-house marketing people who fall under bribe/friendship spell.
Learning what and how to buy.
One of my first clients back in the 80s was a well-known, well respected luxury dealer. When it came time for our agency to negotiate buys, the dealer told me that we ‘had’ to buy a certain station. It turned out the station rep was a golfing buddy. I asked the dealer to have faith in our greatest strengths and just tell his ‘buddy’ that it was out of his hands…his contract with us gave us last word on buys. His buddy didn’t like it one bit, but within several months our agency was buying time at roughly 30% less than the dealer previously paid, plus getting substantial promotional considerations from the station that had never been given. Lesson learned for the dealer. He thanks me to this day.
The second biggest reason to have an outside agency on your team is their ability to inspect what they expect. Often in-house folks drop the ball once the negotiation is finished. Just too many other things to do. A good agency will not only negotiate the best possible buy, but make sure the buy is scheduled properly and runs as agreed. The third biggest reason for an outside agency is the ability to recommend the right mix in the spend. Print, broadcast and the enormous wheel of choices in digital opportunities.
Good agencies can help bring important resources to the table such as web-design and allied vendors.
When choosing an agency, my suggestion is to look beyond just the ‘creative/content’ presentations and look more closely at the synergy of the alliance. For many years our agency turned down clients for the simple reason that we didn’t think it would be a good fit. A dealership should consider the agency’s ability to understand and interpolate the brand strategy. A presentation from an agency should be a balance of the agency’s capabilities, as well as the ability of the agency to grasp who you are, what you are all about and where you want to go.
Hiring an agency that works with other dealers and understands the automobile business will save both a lot of time and money. However, I still believe having market exclusivity is important. When an agency works with more than one dealer in your marketplace, you’ll always wonder if you…or your competitor is getting the best that agency has to offer.
Additionally, it is helpful to develop a close confidence with an agency so they understand the bottom line impact of marketing efforts on driven traffic, conversion and profit. A good agency can do the kind of research to help you truly understand your best possible target customer and create the brand perception that will build your share of mind, while building your share of market.
Bringing in-house and outhouse together
Most importantly, if you decide to incorporate both an in-house and outhouse effort in your marketing plans, make sure it is the right fit with a clear understanding of who does what and how the process works. I would suggest that the dealer be part of the negotiations with the internal and external entities. Even though you would prefer that the in-house person manage and have responsibility for the external efforts, making the ‘outhouse’ people part of the team versus just a vendor role will have the most rewarding results.
The dealer should sit down with both the in-house and outside agency for marketing reviews at least once a quarter. This allows the outside agency to share suggestions without potential blockage for personal reasons. Encourage exploration of new ideas! Discourage ‘because that’s the way we’ve always done it’.
Finally, do your homework before hiring both in-house and outhouse people. Talk with references. Include character and honesty in the conversation. The agency I founded has a strict policy on gratuities from any media person or vendor. If you’d like a free copy of the policy, just email me.