In-House Agencies are the New Black
There are a lot of trends you don’t want to miss out on, and this year’s agency model should definitely not be one of them. Especially since we are seeing such a large global movement of bringing agencies in-house.
Why are we seeing this trend? Well, there is a new generation of marketers, part of the digital age who have a more direct relationship with customers and aren’t reliant on traditional media to accomplish their goals.
There is also a shift away from big budgets and traditional media channel spend. The new generation of marketers have a different focus, it’s now all about Time, Savings and Efficiencies.
According to ANA’s 2018 report, there was a 34% increase in the number of in-house agencies, with an 80% overall satisfaction rate. Brands aren’t just dipping their toes in the in-housing advertising water anymore, they’re starting to dive in head first.
Marketing Benchmark Companies Who Have Taken the Plunge
Time. Honda UK recently launched the Engine Room as an internal content hub. Content and copy changes take an hour when similar tasks took their agencies a month. Yes – A bloody month! It’s no wonder 68% of advertisers were frustrated in the time it took to turn around briefs (source: 2018 ISBA Survey).
Savings. Ford is embarking in a massive restructure of agency responsibilities. To find the right balance, they are adding 100 new in-house marketing positions. Their focus? Investing in brand design, digital labs, media tools, and partnerships. Savings? $150M annually.
Efficiencies. Vodafone is aiming at internally managing two-thirds of the $200M digital spend. They will be making all biddable buys including the majority of search, social and programmatic. Savings should far surpass what agency-led arrangements they’ve had in the past. You don’t shift 66% of advertising in-house without assuming major internal efficiencies.
The balance between in-house and outsourced teams has been shifting since 2018. The in-housing advertising discussion is bound to follow. It will move from tactical chit-chat of outsourcing functions to a more strategic conversation regarding the most optimal marketing structure.
Marketing consultants suggest finding a hybrid model that has both agency types.
Agency and technology providers offer value to brands and they aren’t going to disappear any time soon. So in-housing some elements of the marketing supply chain i.e.,
- creative production
- media buying
should not be seen as a threat. They should be viewed as an opportunity to realign, reinvent, and re-define around the needs of brands.
Ensuring you get the right marketing ecosystem is crucial when the alternative could mean disaster. Like forgetting a comma that changes “Let’s eat, grandpa” to “Let’s eat grandpa.” Don’t eat grandpa. Take the time to figure out the best approach for your company.
One of the advantages of bringing work in-house is that the teams don’t need to make a profit, they just need to cover costs. The best part for internal marketing teams is that they have more control over messaging and creative. Along with all the in-house efficiencies that arise. This puts them at a distinct advantage over external agencies.
So what does the conversation need to be to make both the agency AND the marketer successful? Well, I’m glad you asked. Here’s a list of three things that fit the bill.
Working On-Site to support Branding
Brands from McDonald’s to Ford have found success when agencies are on-site. They work faster, collaborate better and even have better results – you could say ‘I’m lovin’ it!’
Consolidation and Client-Centric Models
Trust is key in any relationship; personal, business and with agencies/marketers, especially. Big brands with multi-market exposure are consolidating, partnering with agencies they trust, to design solutions around their needs.
Flexible Contracts lead by Marketing Procurement
Control is shifting in a paramount fashion. So agencies need to work with brands to rethink business terms like rebates, data ownership, and audit rights. If they need help coming up with the right terms and conditions, they always have marketing procurement to help them.