In-House

In-House Agencies – How did we get here and do they really deliver ‘more for less’?

In-House Agencies

“Pull Quote”

Brands quickly discovered that as well as cutting their agency costs, in-house agencies could create and publish branded content in less time than it took to agree a campaign brief and a job start with their agency

One of the more powerful and sustained trends in Marketing over the past decade has been for brands to bring ever more functions of their marketing services in-house.  Indeed while the ‘full service agency’ was still the norm little more than a decade ago, it now seems just a matter of time before we start seeing ‘full service clients’ fulfilling 100% of their end-to-end marketing requirements either internally or via an eco-system of in-house agencies, out-sourcing partners and consultants/freelancers.

The driver for this has obviously been cost savings; few other issues grab senior management attention and accelerate their decision-making so forcefully.  And of course it’s no coincidence that this trend has been mirrored over exactly same period by the growth of Marketing Procurement both as a specific discipline and a functional role.

Initially, brands employed cost consultants to audit their agencies in response to spiralling campaign costs and as we all know it quickly became clear that there were substantial savings to be made especially with larger ticket items such as TV commercials and large print campaigns.  This immediately opened a huge can of worms about agency remuneration that still rages to this day and it’s fair to say that Marketing Procurement folk have been both foot soldiers in this war and at times, even cannon fodder.

Production starts to move In-House

However the really seismic changes that we’ve seen take place in the last decade have happened because the efforts of Marketing Procurement came at the same time as digital technology was democratising the means of ad production.  As soon as it no longer cost seven figure sums or took a cast of thousands just to get a middling marketing campaign in front of the consumer, it became a lot less challenging for brands to take over for themselves.

By bringing specific Marketing functions in-house, brands have been able to chip away at their agencies’ offerings and their fees.  And the marketing sector has responded with poachers becoming gamekeepers and directly offering to brands bespoke and specific services that formerly were purchased from their agencies.  The facilitators in this process have been Marketing Procurement and brands have relied on their skills to set up purchasing and supply deals with third parties – for instance to create in-house agencies.

The prerogative for in-sourcing has always been to create more for less.  Or at least, the same product only for a lot less cost.  Fairly or not, agencies are often perceived as slow and expensive while the proliferation of lower cost (or free) digital media and the more immediate format and tone of Social makes the high concept, high cost ad campaign seem redundant.  Brands see that their customers are ‘always on’ and they want to be the same.

Suddenly they don’t just need heavyweight seasonal ad campaigns any more – they need ‘content’.  And they need a lot of it, oh and they need it very fast, thank you very much.  Hence brands quickly discovered that as well as cutting their agency costs, in-house agencies could create and publish branded content in less time than it took to agree a campaign brief and  a job start with their agency.

Read More: In-House Agencies: A win for marketing procurement

However, immediacy doesn’t solve every problem; the perennial headaches for in-house units are productivity and quality.  A speedy job start counts for little if it takes much longer to complete trickier projects or external resources need to be bought in to deliver the required standard.  It’s also challenging for managers to compare costs for in-house (cheaper but sometimes slower) against external agency (more expensive but potentially higher value/more complex) not least because the cost base of an in-house resource is difficult to allocate to specific projects.

Do brands still need agencies?

So where is the industry now?  Right now, brands are asking themselves: ‘do we still need agencies at all?’  To their credit, agencies have responded strongly by finding multiple ways to prove their continuing worth and relevance – just look at the proliferation of agency models in the last few years.

On the other hand, brands have struggled to approach the creative heights that agencies still dominate.  Weiden & Kennedy created the Colin Kaerpernick campaign for Nike with ‘Taking the knee’ now a potent symbol in the Black Lives Matter campaign. However, somewhat ironically on the other hand, Pepsico is remembered for its Kendall Jenner ad campaign that drew a torrent of complaints that the ad was not only clumsily executed but that co-opted protest movements such as Black Lives Matter for commercial gain. The ad was conceived and produced by its in-house agency, Creators League Studio.

This is where the ‘more for less’ dynamic really starts to bite.  Marketing Procurement has played a huge role in delivering the ‘less’ but now brands increasingly need to discover ways to exploit the ‘more’.  Quicker and cheaper obviously doesn’t directly equate to better.  The challenge to create excellent marketing content, but within far stricter time and cost parameters than external agencies typically operate in, is one that brands and their partners are having to grapple with right now.

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Building collaborative partnerships

The solutions that they need are perhaps not to be found within agencies themselves but rather with those agencies’ typical suppliers  – production companies, photographers, freelance creatives, campaign producers and the like.  So, rather than have the traditional model of an agency roster, brands these days need to start to develop their own talent networks, build relationships and form a whole range of partnerships in order to meet their ever evolving marketing services requirements.

In the past that was a practical impossibility because the difference in cultures was too great.  However with the growth of the in-house agency, it is now a much more feasible prospect since an in-house unit can act as an ideal launching pad for forging links and maintaining creative partnerships.

A good example of a solution that has arisen from this new direct collaboration between brands and their content production partners is the technique that at Sandstorm we call ‘Shoot to Match.’

Our direct to brand clients always want to achieve more for less and re-using assets as much as possible is a key way of achieving this.  Shoot to Match is a supercharged form of smart versioning.  Instead of initiating a whole new production from scratch (and all the cost, time and perspiration that entails), we’ll take an existing project and reshoot only the sequences that actually need updating, matching the new footage exactly to the original so when substituted in a new edit version, viewers can’t spot the joins.

This allows a brand to take a high cost external agency-type project that they know has worked and replicate it for a new campaign period.  This is a hugely powerful technique that saves both budget & turnaround time and above all, it helps increase ROI on marketing spend and is therefore a solution that works both for the brand, for Marketing and for Procurement.

Going forward, the remit for brands now is to extend the scope of the marketing comms they are able to produce in-house, making the most of the cost efficiencies that this affords but also taking on the challenge to be more ambitious as well.  That will sometimes mean using external partners but in flexible and ever more sophisticated ways.  Those brands that succeed will be increasingly self-reliant and therefore far better equipped than their competitors to deal with the challenges ahead.  And Marketing Procurement, once again, are the ideal enablers for this progression.

About the Author

Ayo Hughes worked as Head of Production at several major Advertising & Digital agencies before setting up a full service DRTV agency running TV & digital campaigns across Europe.  He is currently a freelance Executive Producer & Marketing Consultant and Strategy Director at Sandstorm Films

The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of Marketing Procurement iQ or imply endorsement from the publisher