Is the current advertising in-housing trend a real threat for agencies?
It’s a key question facing agencies today, particularly those in media and digital. As clients demand more transparency and agility, agencies are increasingly having to vie with the temptation for brands to bring the whole advertising process into their own hands.
In-housing is happening on an unprecedented scale right now. The agency world is still thriving, but it needs to respond to this new challenge. So how can agencies stay relevant and useful to their clients in this era?
ALF Insight attended the recent ‘When brands take advertising in-house’ Campaign breakfast briefing to hear some of the UK’s top marketers and agency leaders answer these questions. Below are some of the key themes which came out of the event.
What’s behind the in-house trend?
Cost is certainly a driver: Unilever, which works with on-site agency U-Studios - staffed by Oliver - says that its hybrid operation is 30% cheaper than its old external model. This undoubtedly makes in-housing appealing. Additionally, lack of trust and transparency – particularly when it comes to digital media buying – has driven many brands to seek more control over their advertising.
But neither are decisive factors. The less often discussed reasons, although far more important, seem to be efficiency and agility.
Both Catherine Newman, chief marketing officer at The Times, and Alex Naylor, chief marketing officer for Barclaycard, said that working with an in-house team allows them to produce content far more quickly. For News UK – a publishing business – speed of delivery is particularly important. Many of the key stakeholders in the business are editors and publishers, people used to getting news out daily, so agencies are expected to meet similar deadlines. With an in-house team, proximity alone can drastically speed up processes. Wunderman’s 2018 Future Ready study found that 50% of chief marketers say in-house advertising is quicker.
As Newman said, many advertisers prefer ‘momentum over perfection’. Some campaigns might be worth waiting for, but when consumers have almost universal digital access to content and plenty of it, brands need to be regularly producing and updating work to stay relevant.
Naylor mentioned that Barclays is becoming more and more a digital business: most of its interactions with customers are digital, and as a result, much of its advertising is too. Using its in-house team, Barclaycard was able to run a digital campaign earlier this year that had refreshed creative rolling out once a month.
In-house and on-site teams are also able to better understand the client and their needs with proximity allowing for better aligned strategic objectives. Rather than creative teams working on a concept and presenting it to the marketing team only to have it shot down by key stakeholders on the client side, the in-house team can see how these stakeholders work, understand their needs and tailor proposals to them, meaning decisions are made faster.
Proximity also means easy access to data, which is not to be sneered at in today’s world.
In-house teams can encourage greater collaboration between different disciplines, a key issue for brands currently. Future Ready found that 72% of chief marketing officers feel their advertising operations are too siloed. Media planners and programmatic experts, digital marketers and creatives can all be brought round the table to discuss, decide and execute plans together in an in-house team.
How should agencies respond?
Agencies are far from obsolete. In-housing doesn’t always mean the end of an external agency relationship; in fact, plenty of advertisers – including Barclays and News UK – have hailed the benefits of having both a permanent in-house team and external agency support. Others have gone for an ‘on-site’ model, working with businesses such as Oliver to create an in-house team staffed by the agency.
However, some brands see the advent of in-housing as a reason to split with their incumbent external agency. The launch of BBC Creative in 2016 triggered the end of the broadcaster’s relationship with BBH.
Agencies need to change their behaviour and become more agile. The integration of agency culture with that of a brand is one of the key challenges for advertisers hoping to move their advertising in-house. Newman recounted a visit to an agency on a Friday afternoon at 3pm only to find they’d all gone home!
Agencies need to put clients back at the centre of their own operations. Instead of considering what they can offer, they should ask themselves what their clients want and how they can help them achieve it.
However, agencies do have some things brands don’t have: agencies can attract top talent. An in-house team simply cannot rival the attraction of working for a high-flying agency, meaning they lack the people necessary for great creative work. With a hybrid model, brands can achieve the efficiency that comes from having an embedded agency and combine it with the great performance and creative output from an external team.
How can brands begin to move their marketing in-house?
There will be obstacles. Naylor pointed out that the difficulties that come with in-housing often come in phases: in the early stages, brands can let their ambition get the better of them, trying to achieve more than what they’re capable of. Later, they become victims of their own success, unable to cope with the demands on their in-house team because they haven’t yet built the infrastructure to support it.
So brands should plan and be prepared – in-housing is a long and complex process. It took Intel a year of planning before completing the move! News UK previously experimented with an in-house agency, before it launched Pulse Creative, and was forced to cut the initiative short because it didn’t work. Brands should make sure they know what they’re doing and how they’re going to do it before they start in-housing. It is definitely not a ‘one size fits all’ scenario but, as Daniel Gilbert, Brainlabs’ Chief Executive, put it, a ‘case-by-case’ scenario.
Although there are lots of reasons to move advertising in-house, everyone on the Campaign breakfast briefing panel agreed that brands should never do it only for financial reasons. It simply won’t work. Cost has to be balanced with effectiveness.
And while brands might justifiably feel like they need more control over their advertising, they might also need support from their agencies. News UK and Barclays aren’t the only brands who propagate the benefits of the hybrid model. When Vodafone moved a significant proportion of its digital media buying in-house earlier this year, it retained incumbent agency Wavemaker for around a third of the business.
Debbi Morrison, director of consultancy and best practice at ISBA, said that the in-housing trend is ‘constantly moving and changing’ and that there is ‘more disruption to come’. This is echoed by Johnny Hornby, founder of The&Partnership, according to whom ‘we are at the very beginning of the disruptive curve.’ So, watch that space. It is not going to go away! But not all is lost for agencies as long as they know how to adapt to this new challenge and retain their USPs.