IDEAS home Printed from https://ideas.repec.org/a/ibn/ijmsjn/v8y2016i1p1-13.html

Build It, Buy It, or Both? Rethinking the Sourcing of Advertising Services

Author

Listed:
  • Alvin J. Silk
  • Marta M. Stiglin

Abstract

This paper provides an update on the current state of in-house agencies. Whereas traditional consideration of internalizing advertising services was framed as a binary choice of build or buy, today¡¯s advertisers frequently pursue hybrid policies of build and buy to procure the customized bundle required to develop, produce, and implement relevant, resonant promotional campaigns. Increasing numbers of advertisers are discovering that the demand for advertising and marketing services is best served through the coordination and integration of resources from both inside and outside the company, rather than assuming that these options are mutually exclusive. A review of advertising industry history reveals why internal agencies have long operated in the shadows of their external counterparts and how the former organization form has evolved over time. The core competencies underlying the contemporary in-house agency model are analyzed and the competitive position that in-house agencies presently occupy in relation to external providers is assessed. Two case examples of successful internal/external agency collaboration are presented. Finally, recommendations are offered for advertisers seeking to bring their internal and external agency resources together and arrive at a more-collaborative operating model for advertising services.

Suggested Citation

  • Alvin J. Silk & Marta M. Stiglin, 2016. "Build It, Buy It, or Both? Rethinking the Sourcing of Advertising Services," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 8(1), pages 1-13, February.
    • Handle: RePEc:ibn:ijmsjn:v:8:y:2016:i:1:p:1-13
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ijms/article/view/56927/30496
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ijms/article/view/56927
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sharon Horsky, 2006. "The Changing Architecture of Advertising Agencies," Marketing Science, INFORMS, vol. 25(4), pages 367-383, 07-08.
    2. Sharon Novak & Birger Wernerfelt, 2012. "On the Grouping of Tasks into Firms: Make‐or‐Buy with Interdependent Parts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(1), pages 53-77, March.
    3. Evans David S., 2008. "The Economics of the Online Advertising Industry," Review of Network Economics, De Gruyter, vol. 7(3), pages 1-33, September.
    4. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    5. Arzaghi Mohammad & Berndt Ernst R. & Davis James C. & Silk Alvin J., 2012. "The Unbundling of Advertising Agency Services: An Economic Analysis," Review of Marketing Science, De Gruyter, vol. 10(1), pages 1-55, December.
    6. Oliver E. Williamson, 2010. "Transaction Cost Economics: The Natural Progression," American Economic Review, American Economic Association, vol. 100(3), pages 673-690, June.
    7. Alvin J. Silk & Ernst R. Berndt, 1993. "Scale and Scope Effects on Advertising Agency Costs," Marketing Science, INFORMS, vol. 12(1), pages 53-72.
    8. Horsky Sharon & Michael Steven C. & Silk Alvin J., 2012. "The Internalization of Advertising Services: An Inter-Industry Analysis," Review of Marketing Science, De Gruyter, vol. 10(1), pages 1-35, October.
    9. David S. Evans, 2009. "The Online Advertising Industry: Economics, Evolution, and Privacy," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 37-60, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Birger Wernerfelt & Alvin Silk & Shuyi Yu, 2021. "Internalization of Advertising Services: Testing a Theory of the Firm," Marketing Science, INFORMS, vol. 40(5), pages 946-963, September.
    2. Alvin J. Silk & Ernst R. Berndt, 2021. "Aggregate Advertising Expenditure in the U.S. Economy: Measurement and Growth Issues in the Digital Era," Foundations and Trends(R) in Marketing, now publishers, vol. 15(1), pages 1-85, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Birger Wernerfelt & Alvin Silk & Shuyi Yu, 2021. "Internalization of Advertising Services: Testing a Theory of the Firm," Marketing Science, INFORMS, vol. 40(5), pages 946-963, September.
    2. Sharon Horsky & Steven C. Michael & Alvin J. Silk, 2008. "The Internalization of Advertising Services: An Inter-IndustryAnalysis," Harvard Business School Working Papers 09-007, Harvard Business School.
    3. Horsky Sharon & Michael Steven C. & Silk Alvin J., 2012. "The Internalization of Advertising Services: An Inter-Industry Analysis," Review of Marketing Science, De Gruyter, vol. 10(1), pages 1-35, October.
    4. Hana Choi & Carl F. Mela & Santiago R. Balseiro & Adam Leary, 2020. "Online Display Advertising Markets: A Literature Review and Future Directions," Information Systems Research, INFORMS, vol. 31(2), pages 556-575, June.
    5. Susan Athey & Emilio Calvano & Joshua S. Gans, 2018. "The Impact of Consumer Multi-homing on Advertising Markets and Media Competition," Management Science, INFORMS, vol. 64(4), pages 1574-1590, April.
    6. Yoon Kiho, 2010. "Optimal Quality Scores in Sponsored Search Auctions: Full Extraction of Advertisers' Surplus," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-11, July.
    7. Jisun Yu & Seung-Hyun Lee & Kunsoo Han, 2015. "FDI motives, market governance, and ownership choice of MNEs: A study of Malaysia and Thailand from an incomplete contracting perspective," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 335-362, June.
    8. Arzaghi Mohammad & Berndt Ernst R. & Davis James C. & Silk Alvin J., 2012. "The Unbundling of Advertising Agency Services: An Economic Analysis," Review of Marketing Science, De Gruyter, vol. 10(1), pages 1-55, December.
    9. Mohammad Arzaghi & Ernst R. Berndt & James C. Davis & Alvin J. Silk, 2008. "Economic Factors Underlying the Unbundling of Advertising Agency Services," NBER Working Papers 14345, National Bureau of Economic Research, Inc.
    10. Ogidi, Odun & Anthony U. Utulu, 2016. "Is the New Media Superior to the Traditional Media for Advertising," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 4(1), pages 57-69, March.
    11. Cristiano Codagnone & Fabienne Abadie & Federico Biagi, 2016. "The Future of Work in the ‘Sharing Economy’. Market Efficiency and Equitable Opportunities or Unfair Precarisation?," JRC Research Reports JRC101280, Joint Research Centre.
    12. Alvin J. Silk & Charles King III, 2008. "Concentration Levels in the U.S. Advertising and Marketing Services Industry: Myth vs. Reality," Harvard Business School Working Papers 09-044, Harvard Business School.
    13. Bodo Herzog, 2018. "Valuation of Digital Platforms: Experimental Evidence for Google and Facebook," IJFS, MDPI, vol. 6(4), pages 1-13, October.
    14. Emmanuel Petrakis & Panagiotis Skartados, 2022. "Vertical Opportunism, Bargaining, and Share-Based Agreements," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(4), pages 549-565, June.
    15. Oliver Hart, 2013. "Noncontractible Investments and Reference Points," Games, MDPI, vol. 4(3), pages 1-20, August.
    16. Carlos Omar Trejo-Pech & Roselia Servín-Juárez & Álvaro Reyes-Duarte, 2023. "What sets cooperative farmers apart from non-cooperative farmers? A transaction cost economics analysis of coffee farmers in Mexico," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-24, December.
    17. Christopher Hansman & Jonas Hjort & Gianmarco León-Ciliotta & Matthieu Teachout, 2020. "Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3570-3625.
    18. Nolan Charles & Trew Alex, 2015. "Transaction Costs and Institutions: Investments in Exchange," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 391-432, July.
    19. A. Daly & A. Scardamaglia, 2017. "Profiling the Australian Google Consumer: Implications of Search Engine Practices for Consumer Law and Policy," Journal of Consumer Policy, Springer, vol. 40(3), pages 299-320, September.
    20. Shi, Guanming & Stiegert, Kyle & Chavas, Jean Paul, 2010. "An Analysis of Pricing in Horizontal and Vertical Markets: The Case of the Cottonseed Market," Working Papers 201439, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijmsjn:v:8:y:2016:i:1:p:1-13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.