Did you know the ANA recently found 78% of brands had some form of in-house agency? Think brands such as Vodafone (which has stated that it’s biddable digital media buying should be at least 10% more efficient a year and save it tens of million pounds a year after bringing it in-house from WPP’s Wavemaker) and Unilever (which recently claimed that it had saved more than €500m due to the efficiencies of in-housing and reusing assets) as well as Verizon and JP Morgan Chase in the US.
One CMO who has implemented an in-housing programme is Sam Day of Confused.com. He commented: “in-housing tends to cost more than brands initially think but that the gains in terms of performance tend to be stronger than estimates say”.
“It’s driven by the tech costs of running accounts on the cost side”, Day added. “On the performance side, it’s linked to teams being laser-focused on one brand and caring about the success of their business”.
The key factors driving the in-housing trend
What are the key factors driving this trend and is it only relevant to mega global brands? There are a number of things in play here, for example:
- Budgetary pressure on brands
- The need for marketers to retain control of their data rather than hand it to agencies
- Brand safety concerns
- Advertisers’ ability to buy direct from tech platforms such as Google, Facebook and Amazon
- Ad fraud
- Transparency concerns
- The behavior of agencies – undercutting each other, squabbling over responsibilities, pitching for accounts that shouldn’t be up for review etc.
So, is all lost for agencies? Clearly not, many brands still attach significant importance to their agency relationships – indeed the aforementioned ANA survey found 90% of respondents still use agencies in some way or another and some such as Reebok seem to be bucking the in-housing trend.
Reebok’s VP of marketing, Melanie Boulden, recently commented: “While I have a team of experts who are well-versed on product and marketing, it is great to have external partners… who are privy to the latest technologies and trends and are really on the forefront of where marketing and digital marketing are going.”
How can agencies prevent in-housing?
What can agencies to do reset their relevance and sell themselves to sceptical brands? Here are seven suggestions:
1. Remember you are the experts
Agencies need to remember that they are experts in their fields and behave like them. Align yourselves to the consultants – think Accenture – and other professionals like lawyers and accountants.
Agencies need to articulate their specialist skills and market knowledge. For example:
- Explain the challenges to brand safety in the digital environment, how quickly things change, and how agencies are in a position to help combat these and stay on top of developments in this area.
- Pitch specialist skills, for example in PR crisis communications and management.
- Showcase expertise in compliance areas like data protection and advertising law.
Agencies are uniquely placed to keep up-to-date with market developments so should show how they can use such skills and knowledge to benefit their clients. Again, many other professionals do such things very effectively. Can you learn from them?
2. Add value and articulate how you do it
This can only be done if the client understands what services they are getting, what price they are paying and how the services benefit their business. Agencies need to:
- Highlight the return on investment the client gets from its various marketing activities.
- Demonstrate understanding of the client’s business, its motivations and marketing needs.
- Show “client focused” outcomes.
- Demystify and demonstrate the value of their relationships with journalists and media owners, which are unavailable to most clients, and show how these are leveraged to the client’s advantage.
3. Recruit and retain the best talent
Talent retention and recruitment is a challenge for in-house teams and agencies alike – recent reports of ‘raids’ on Madison Avenue from Amazon illustrate the growing challenges from all sides. To have a chance at achieving points one and two, agencies need to have, and need to be seen by clients to have, the best talent, so must play to their strengths to win on this with the potential to offer higher salaries, better career progression, better more collaborative working environments, variety of clients and work, creative culture and for most agencies, an appealing central London location.
4. Invest in technology
The costs of investing in specialist technology can be prohibitive for in-house teams. Agencies should demonstrate the value to the client of their bespoke systems and other technology.
5. Become the client’s trusted advisor
Build loyalty. Move away from being a service supplier to becoming trusted advisors and business partners with brands, bringing strategic, impartial, expert advice to the table. Highlight the different insights agencies can bring as external advisers, free from the sometimes political motivations of internal executives.
6. Hold the ‘keys’
Make sure as far as possible that you as an agency own the IP in your creations. Check contracts with clients and employment contracts to ensure proper protection of ideas and products. Your intellectual capital and property is a valuable resource worthy of protection. If your client wants to use it, it should pay you appropriately.
7. Be flexible
Be flexible to the needs of the brand, and be proactive. Consider offering a hybrid model to the client so they can pick the services they want. Look to develop and offer new additional/complimentary services.
In-housing in some shape or form looks here to stay. The key will be for agencies to acknowledge this and adapt their services to this new world. Believe in the value of the agency.
