- Home security company ADT has taken all of its media planning and buying in-house.
- The move enabled it to move faster, gain more control of its data, make faster decisions, and cut costs by 20%, said CMO Jochen Koedijk.
- But as the trend to take marketing in-house accelerates, so do the growing pains associated with managing internal agencies, according to a new ANA report.
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When Jochen Koedijk took over marketing for home security company ADT last summer, he found a company with a reputation for trust and reliability but an image that didn't match the contemporary technology it provides.
The CMO decided that to update the company's image, he had to change it from the inside by instilling a performance marketing culture, drawing from his experience at companies including Chewy.com and Amazon. Starting last fall, he dropped the company's 15 media agencies, including Horizon Media, iProspect, and Harte Hanks, and brought all its media planning and buying in-house.
"When you outsource everything, your marketing operation doesn't run in unison," he said. "My main instigator was the need to take ownership of our own brand and drive change within and outside the organization."
ADT has saved 20% of fees by taking its media-buying in-house
As of July, ADT has been handling all its media in-house, including digital, mass-media, and direct mail marketing, as well as marketing analytics and data science and market research, with help from 20 new hires, said Koedijk.
In-housing is just one way that ADT has been trying to keep pace, said Koedijk. As it fends off increasing competition from upstarts like SimpliSafe, August, Google, and Amazon, the 145-year-old company has been trying to stay relevant by investing in marketing and acquisitions. The brand ran its first Super Bowl spot in 2019 and acquired DIY home security startup LifeShield.
The consolidation has allowed the company to move faster, have more control of its data, make faster decisions, and have direct relationships with platforms and media companies, he said. ADT built a media-mix model to measure incrementality, for example, which lets it test how different ads perform with different audiences on different platforms and shift budgets accordingly.
ADT also built a model to measure the effectiveness of its TV advertising, which comprises the bulk of its media spending, said Koedijk. He wouldn't give specifics, but Kantar estimated that ADT spent more than $119 million on advertising in 2018.
"People may think we're a dinosaur of a company to be running TV ads, but the consideration cycle for our products is fairly long, so TV still works very well for us," he said.
Koedijk said in-housing has also let it cut costs by 20% through a reduction in agency fees and agency overhead and by doing its own media-buying.
But marketers are beginning to encounter in-housing speed bumps
A number of brands including Anheuser-Busch, Liberty Mutual and Hershey's have recently taken their marketing duties in-house to gain cost savings, transparency, and more control over their customer data. 78% of brands that are members of the Association of National Advertisers reported in 2018 that they had some form of an in-house agency.
Read More: Liberty Mutual slashed its agency costs 30% by bringing 80% of its creative work in-house
But as the trend accelerates, so do marketers' growing pains with managing internal agencies. According to a new report by the ANA, the Boston Consulting Group, and ANA's legal firm Reed Smith, "Managing In-House Agency Creative Content and Legal Concerns," marketers with in-house functions struggle with keeping teams energized and attracting top talent. 63% of the 111 respondents said that keeping in-house agency talent energized was hard, followed by 44% who said that attracting talent was an issue.
As a senior director of marketing for a footwear company said in the report: "Getting high-quality people is very hard, as mid-level agency executives are well compensated, so going in-house often requires taking a lower salary and dealing with the monotony of company life, where you focus on fewer things."
Koedijk acknowledged that attracting talent was time-consuming and that ADT built its in-house team slowly for that reason. ADT also hasn't completely phased out agencies; he also said it still relies on ones such as McCann for creative.
