In-House vs. Agency
Early on in my tenure as the creative leader at HomeAdvisor I was asked to show leadership whether an in-house creative team was a better investment than the previous model: sending all creative deliverables to agencies. I set out to show why keeping a creative team in-house was the best choice for HomeAdvisor. I presented this in two ways:
Advantages of An In-House team
I broke down the advantages of an in-house team over the agency model. This will not be the same for every organization, but these were the advantages for HomeAdvisor at that time.
BRAND KNOWLEDGE
My team gained insights directly from sales, customer service, marketing and product teams, informing creative decisions. Agencies only view brands externally. This often leads to better designed, more applicable work.
RELATIONSHIPS
Internal teams build strong working relationships and trust with internal stakeholders over time through open communication. With that trust, in-house creatives can take smart risks agencies may not take.
SPEED
In-house teams often move faster without sacrificing quality. With shared context, in-house designers can get real-time feedback and iterate quickly rather than work in a vacuum between reviews. My team could be nimble and responsive in ways agencies can't match.
COST
An in-house creative team can greatly reduce costs compared to outsourcing daily creative needs to agencies. If certain skills like design, writing, and production are necessities used regularly, it is far more cost-effective to build that competency internally rather than pay ongoing agency fees. The break-even point comes quickly, and over time, a strong in-house team will provide a superior return on investment through constant expertise.
The Real Cost Comparison
The second approach was to show a more realistic comparison of the costs between the two using some of the information above as a guide. My team members tracked the hours they spent on every project. But we divided those hours between "project hours"( the time spent working in Photoshop, Illustrator, Figma, etc...) and "supplemental hours" ( hours spent answering emails, in meetings, or in design reviews discussing details of the project.)
Then we weighted the hours in those two areas according to what I called a "company knowledge score" and an "expertise score". After my team members provided the hours they spent on each project, they also provided those two scores, from 1-5. A score of 1 for each meant the project required the lowest amount of technical expertise and the smallest amount of company knowledge to complete, and 5 meant the highest in both those areas to complete. Each score weighted the hourly number a slight percentage progressively higher than the original number as the score increased.
The weighted scores allowed us to show hourly numbers that more accurately reflected how an agency truly bills for projects: in increments of time, that translate to money based on an hourly rate. In doing this I was able to show that while the in-house team might spend 6 hours of time to complete a project, the agency would actually bill us for more than that 6 hours. So in sending the identical project to an agency, we would be billed for more than what would be equivalent to an in-house team's hours, due to the extra time an agency needs to compensate for the discrepancy in their knowledge and understanding of the company and the project.
Likewise, the expertise score more closely mimics the calculus an agency might make about their employees. - while a more senior designer might work more quickly, they are more expensive per hour, while a more junior designer might be cheaper, but might also be slower and take more hours to do the work.
Was this method an exact science? No. But it provided a method by which our leadership had a greater understanding of what the cost was to run an in-house team over and above the surface comparison to agency hours.