If brands are interested in bringing marketing/advertising capabilities in-house, should agencies be fearful? I don’t get that sense, based on attending the Association of National Advertisers In-House Agency Conference recently.
The development of in-house agencies is certainly a challenge for the traditional agency business. But this model won’t work for every single brand in the world. And if it does, there are still ways that agencies can work with those brands.
With that in mind, let’s get into some hot takes from the conference.
Brands now consider creative the starting point for bringing marketing/advertising in-house. Presentations from The Wonderful Company, Disney and Cisco leaned on that side.
The advantage for brands is having people who are direct stakeholders, who are closer to customers and better relate with them. But we could argue that great creative agencies are able to show that they can be equally empathetic to said customer. And if they can’t, there is an advantage of having an outside, unbiased perspective to avoid groupthink.
In-housing media has a lot of elements: vendor contracts, stack management, buying (activation and talent), media planning, account management, operations and innovation. The “shared” model should be considered, with media experts in-house while the agency partner runs the media.
With contracts and stack management, some brands have their agencies own and negotiate contracts while the brand owns its data. Some brands also prefer an agency to test technology before they buy it. Also keep in mind that adjacent teams in the brand such as legal, sourcing, and data protection may not have media expertise.
The major reasons brands create in-house teams is to get greater efficiency, foster more collaboration, and generate more loyalty. The money saved on agency fees can be reinvested into media and recruiting talent. Furthermore, teams have more skin in the game and feel empowered, which leads to them sticking around longer and preserving the brand’s institutional knowledge.
However, we should note that the majority of in-house models are a hybrid, with some (creative and media) work done in-house and some given to outside agencies.
Is it worth it?
In-housing comes with major challenges. Imagine the volume of work, where one brand cited 7,000 unique projects per year, with 17,000 different pieces of output. Generating an idea and executing it quickly can be messy with delegation and approvals. Role clarity, process mapping, project management, and scope development are all required. How would a brand project manage and run efficient workflow?
When it comes to media, brands want to use content and leverage digital innovation to tell their stories. Data and analytics allow for 1-1 conversations, where making content specific to different segments is important. Brands are interested in using social (both paid and organic) along with paid display, outdoor and TV as channels for these stories.
If it looks like an agency…
A typical in-house agency structure consists of many departments. One brand mentioned having creative, production, media, project management, corporate communications, technology, product development and consumer insights. But many brands aren’t ready to tackle this total load.
A common theme throughout the conference was that nobody has it all figured out. There is no blueprint. Many of the lessons are coming from mistakes that early adopter brands have made. This is not a Big Bang. It’s more like Pangea breaking up and shifting.The in-housing of marketing is not an indictment of the agency model. The brands we talked to at the conference expressed favorable attitudes toward agencies. Many of them still work with agencies in some capacity.
Still, agencies are realizing that they have to change their behavior towards brands. Their model has to shift to more collaboration and consultation if they want to be a relevant partner.
Sure, there's opportunity for transactional marketing work. But what brands really want are trusted relationships with agencies that will support them in whatever direction they take with their marketing.
Genny, a good evaluation. But this is mainly about digital media not traditional media. And its also mainly about sales promotional activities, not branding, though there is some overlap, naturally. So far, there is very little movement towards going in-house for TV, not only on the "creative" side but in media planning and, especially, buying. In addition to many cost efficiency factors---like is there enough day-to-day work to keep the people busy, other factors such as the difficulty in getting good talent to shift to the advertiser side and the lack of knowledge about what's happing on many accounts---not just yours, including things a big agency learns by virtue of its wide spread experience which can be shared---- are at play.
As Ed mentioned above: news outlets need to focus on in-housing Digital for the time being.