Marketing Procurement

In-House Agencies: A win for marketing procurement?

In-House Agencies

“Pull Quote”

The collaboration of in-house and external agencies is an asset to procurement professionals looking to produce highly effective teams. Together, they are simply stronger

The growing number of brand advertisers setting up their own in-house agencies has grown exponentially in recent years. This phenomenon, while one of the leading contributors of financial pressures felt by creative agencies, is grabbing the attention of procurement departments. While the advertising function often sees in-house agencies as a viable solution to improve turnaround times, streamline internal communications and better leverage institutional knowledge, procurement departments see the potential of reduced costs and inside sourcing of marketing resources.

There have been well-publicized moves by large brands to strengthen their competencies by relying less on external agencies and taking more strategy and executional expertise in-house.

In the media category, Allstate, StubHub, Unilever and Netflix have all taken some media buying in-house. Unilever is also eliminating waste and driving more effective use of budgets. With zero-based budgeting, the brand squeezed $700 million from production costs by making fewer ads and working through its in-house advertising agency, U-Studio; it reinvested half of the savings into media and in-store outlays.

Anheuser-Busch InBev moved programmatic in-house, claiming 25% savings in the US alone. The brand also created an in-house content production studio and moved social listening and analytics in-house.

The spirits maker Pernod Ricard also brought more digital expertise in-house, saving $71.5 million by purchasing 25% of its media in-house during the first half of 2017 and buying inventory directly from demand-side platforms.

Other in-house moves include Nationwide (programmatic), Target (influencer marketing and programmatic) and Jaguar Land Rover (analytics and programmatic). The list seems to go on.

However, in some cases, it has reportedly been a challenge for some brands to realize the benefits of their in-house agency model or hire top talent. A popular option when contracting with an agency is to partner with one that offers the agency support model and the option to plant one of their own in-house. Wunderman Inside provides clients with a mix of on-site specialists and in-agency resources – this way, the company doesn’t have to worry about hiring or training talent or having that expense sit on the payroll, but they still get the benefit of having these resources embedded within their teams.

This is what drove Oliver to also offer clients its external in-house resources, which it calls “better inside.” It builds dedicated agencies inside their client organizations with the right skills and capabilities, ranging from brand strategy, integrated marketing, content and community management, production and more. This model is becoming increasingly favored by procurement teams.

In-house agencies are known to be nimble, cost-effective and well-aligned to the brand and the strategic imperatives of the business, and they are on the radar of major brands and procurement professionals trying to balance creativity, efficiency and outside perspective with saving money.

And while an in-house agency seems like the best-case scenario, procurement professionals should remember that often, the use of in-house agencies is limited to a few disciplines and the balance of the work may still be handled by an existing roster of external agencies. Look at United Airlines, which has moved video content creation in-house and handling creative content strategy and execution to complement the work it does with agencies like McGarry Bowen and Wunderman.

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We have to be accepting of the fact that brands want to see their in-house agencies – no matter the scale – collaborate with their external agency partners better.

Neither in-house nor external agencies should operate independently – to the contrary. Finding the right balance of internal and external talent to build a top-notch performing organization is a top challenge.

The collaboration of in-house and external agencies is an asset to procurement professionals looking to produce highly effective teams. Together, they are simply stronger.

About the Author

Bruno Gralpois, principal and co-founder at Agency Mania Solutions, author of Agency Mania 2nd Edition: Harnessing the Madness of Client/Agency Relations for High-Impact Results

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.