Performance marketing: in-house, outsourced or hybrid?

Frank Ravanelli assess the advantages, challenges and best practices for each model available to companies which want to maximise their ROI

Companies can choose to grow their performance marketing department in-house, outsource it, or opt for a hybrid model. Here, when I talk about outsourcing, I mean delegating performance marketing to external resources, and not to a fully-owned subsidiary.

In-house
This is the most common scenario: an egaming company employs performance marketeers. It can have a cross-vertical team, which takes care of marketing all the available gaming verticals. In this case, the manager of each vertical liaises with the performance marketing team to ensure the marketing efforts are in line with the overall product road map and promotions for players. An alternative is to have a performance marketing director who co-ordinates the efforts of different teams, each in charge of specific verticals or events.

The perceived advantages of having an in-house team include a higher level of confidentiality and commitment. Plus, considering the team’s career and financial prospects are based on the company’s success, the sense of ownership of opportunities and challenges is perceived as higher.

The main disadvantages of running all the performance marketing tasks in-house are the quite inflexible overheads (employees expect a fair amount of job security, not based on individual tasks), which become more evident when seasonal trends affect the business. Also, no matter how attractive a company is, it is quite unlikely to be able to identify, employ and nurture all the marketing, technical and soft skills required to stay successful in the egaming world.

Outsourced
Egaming companies may outsource what are considered more routine tasks. Outsourcing the whole performance marketing department is not common. Exceptions are pre-startups that angel investors want to optimise before scaling up. Or new products that established operators want to test before making an official launch.

Outsourcing gives a lot of flexibility and reduces the overheads. Contractors can be added, or removed, as the market requires. It is easy to hire contractors for specific tasks, in line with their core expertise. At the same time, considering these partnerships may not be long-term, a company needs to assess how time-consuming it is to identify competent contractors, especially if they are expected to stay only a few days or weeks. Also, hiring people for one month or so may not be a strong motivator for them to work to the best of their ability.

Hybrid
This is a growing trend, especially with ecommerce companies, but also with egaming operators. No matter how big or small a company or business unit is, having internal and external resources is a very effective approach to run one’s performance marketing activities.

The internal resources ensure consistency, full-time commitment and facilitate communication. An internal team usually knows how to present an opportunity in a manner which wins the budget and the creative and IT resources necessary to make a campaign/project successful. The external contractors offer the flexibility and the variety of skills required to stay ahead of the competition.

Internal performance marketeers have a “home advantage”, which allows them to advocate the changes and investments necessary. They also bring an in-depth knowledge of the company’s products, services and customs. The external resources benefit from being in touch with many realities, business models and verticals. They bring techniques, skills and opportunities that are unlikely to be available inside the company. This cross-pollination between internal and external knowledge strengthens the team and its results.

Blueprints for success
No matter if your performance marketing is run by employees, a fractional CMO or a hybrid arrangement, there are some vital best practices that have to be respected. In many cases, they are not even about advanced marketing skills, they are mainly about clarity, accountability and communication.

First, the performance marketing team has to be made part of the goal-setting and resource-allocation process. Make sure to define what success means. If you are a start-up, growth may be the guiding factor by far. If you are a mature company, profitability may trump the other variables.

Second, responsibilities and rewards have to be clearly allocated. Some responsibilities belong to specific individuals, some to the whole team. Performance marketing, with its trackability and analytics, makes it easy to keep people accountable. Also, rewards have to be in line with the goals. We are all responsive to incentives, which do not need to be only financial. Gamification is an important part of a successful performance marketing team, as long as it does not get in the way of team work.

Conclusion: what works better?
Based on my experience as outsourced performance marketing director, the most effective model is the hybrid one – with some ‘ifs’. First, the in-house team needs to be empowered. It needs to receive proper funding, resources and clear objectives.

Second, the outsourced performance marketeers need to be chosen carefully. Unless you already know them personally and are happy about their previous track-record with you, you need to look to the market for talent to contract. LinkedIn is a good, transparent and cost-effective way to do so. You can also use recruitment agencies; if the contract is at least six months long it may make financial sense to do so. Your outsourced performance marketeers should be visible and easy to find. A performance marketeer who cannot successfully market her/himself is unheard of, literally.

At the same time, you need to make sure you are hiring talent, and not hype. Contractors who are speaking at conferences every other day have very little time to do the field work. When you identify the desired performance marketeers, make sure they can deliver what you want. Also, make sure to speak with the person who will work with your team, and not with a sales person from an OPM agency who sub-contracts work to third parties. Get a feeling of the marketeer who will work with your team, not of a sale process.

Third, the goals and rewards of the in-house and outsourced talent need to be aligned. The members of this hybrid team succeed together. The outsourced talent should not be seen as a threat to the job-security of the in-house team, and the in-house team should be seen as a business partner, and not a judge, of the outsourced marketeers.

Assessing the technical and marketing knowledge of a performance marketeer is fairly straightforward, if you ask direct questions about her/his achievements and how they were accomplished. At the end of the day, what really matters is knowing one’s goals. Plus good, two-way communication to ensure each stakeholders is aware of the overall expectations, practical deliverables and incentives for a job well done.