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In-house advertising is a system of product promotion that is executed by members of that product’s firm rather than an external advertising agency. The extent of these internal advertising functions varies; some firms attend to every aspect of the advertising process while others maintain a partial dependence on outside agencies. In-house advertising has both advantages and drawbacks. It allows firms to retain total creative control over the ways in which their products are marketed and can prove cheaper than external advertising services. On the other hand, the creative scope and visibility of ads can suffer without the outsider’s perspective and professional contacts provided by an external agency.
Firms that choose to market their own products usually establish an in-house advertising department. Depending on the size, budget, and advertising goals of the firm, this department can range from a single employee to a full team of market researchers, media buyers, and creative professionals. The functions of an in-house advertising department can also vary depending on the needs and capabilities of the firm. Some conceive, execute, and place their own advertisements entirely independently. Others perform more limited functions; for instance, some firms might design their own ads but rely on an outside agency to place them in the media.
The primary benefits of in-house advertising are the control it affords and the savings it can allow. Unlike firms that outsource their promotional needs, those that generate their own advertising maintain sole authority over the way their product is presented. Depending upon the advertising department’s resources, this control can encompass everything from a product’s packaging to the places its advertisements are seen. Additionally, creating advertisements in-house can prove cost-effective, as it allows firms to avoid the high commissions typically charged by outside agencies.
When contemplating a switch to in-house advertising, however, firms should consider its potential disadvantages. First of all, those creating their own ads may have difficulty conceptualizing their product and its target consumer objectively. As a result, their ads may lack the vision that an outsider’s perspective can bring. In addition, reputable advertising agencies usually have established contacts through which they can secure highly visible ad space. Without this resource, in-house departments may have trouble reaching their target customer.
Finally, firms must determine whether in-house advertising will prove cost-effective. Often this question depends upon the size of the firm as compared to its advertising needs and the revenue its ads will generate. A small firm may find it more expensive to retain an in-house department than to simply pay an external agency’s commission fees, whereas a large firm might find that the opposite is true.