Feb 04, 2020

Will Marketers find a middle-ground between In-housing and Agencies?

Over the last few years, marketers have been agonising over taking back control of their brands, but is the solution as simple as moving agency functions in-house?

  • 91% of brands have moved at least part of their digital marketing in-house.
  • Cost efficiency, greater control and increased transparency are the key reasons brands are taking elements of their business in-house.
  • A study led by the Association of National Advertisers (ANA) in 2018 found that 78% of their members had formed an in-house agency, and 58% of these had been created in the last five years.

In-housing aims to simultaneously simplify whilst expanding a brand’s marketing strategy. It is about providing the right message, to the right people, at the correct time through a more intimate team so that the customer journey can be fully understood and delivered upon.

However, it is not this simple or black-and-white for every brand. Not everyone has found success through in-housing. Shortly after announcing they were taking their programmatic in-house, Vodafone had to confess they were going to backtrack on this after encountering challenges.

In-housing should be interpreted on a spectrum because the level of work taken in-house can vary greatly with differing levels of success. For example, Unilever has reported savings of €500 million since creating more content in-house, with Lego, Revlon, and Duracell following suit by taking more control and starting the process to set up their in-house agency.

The grey area that falls between ‘must outsource’ and ‘must in-house’ is subjective to each company, and brands must base this on what is right for them and their business context. Gayle Noah, Media Director at L’Oréal comments,

“For us, in-housing shouldn’t be seen as a threat to the agency. What we’re building with our agency is about us upskilling for the future so that we can be a better client.”

3 Things To Consider In This Debate:

1. Fragmentation:

A lot of brands are taking the first steps to take elements of their business in-house, but not all of it. While this change can make sense for many reasons, it also runs the risk of creating a fragmented process which can lead to a lack of cohesion - brands must prepare and plan sufficiently before in-housing. 

When a brand considers bringing part of their business in-house, they must pay particular attention to upholding transparency and integration with agency partners. This will ensure that the powerful message a brand wants to deliver to their audience remains as exactly that, powerful. 

A study carried out by Bannerflow found that 87% of senior marketing decision-makers from brands were concerned with the level of transparency from agencies. 

An in-house team provides businesses with a potential solution to this, it means that communication becomes streamlined as the team will be working in close proximity together, resulting in faster decision making, more adaptability, and more opportunity to take creative risks.

Furthermore, through hiring an in-house marketing team, there is less risk of a conflict of interest amongst the team because they will all be sharing a common goal and interest to build their company. Whereas, working with an agency gives room for more contrasting opinions that can cost time and money trying to solve, mainly due to a long line of communication and a team that might not share all of the same goals.

2. Creativity:

While having creative teams in-house means the employees can be fully immersed into the brand culture, a challenge is present when the need for an outside perspective comes in. 

This will always remain as a benefit for external agencies as they can work with a range of clients, they are exposed to new ideas from different business models and many media publishers - only being able to share ideas amongst colleagues will be a limitation for some in-house teams.

However, by having an in-house marketing team, the branding that is promoted will always be in line with the company vision, mission, and goals.

3. Forefront of Innovation:

Agencies are continuously evolving thanks to the wealth of talent, clients, and experiences they are exposed to. Advertisers that choose to work with agencies will have access to cutting edge strategy technology, and people, which is another advantage for agencies - although brands in-housing are not far behind.

Due to greater transparency and increased understanding over ROI, in-housing can allow brands to reduce costs while achieving greater efficiencies. Nevertheless, the improvements in agility and measurement still don’t appear to be eliminating the role of creativity and hiring excellent talent. Therefore, in-housing should not be held as a binary decision. The main thing to keep in mind for both agencies and in-house businesses, is the aim to communicate brand messages creatively and effectively so that the correct impact is delivered to consumers.

Advertisers need to reflect on what they want to achieve as a business. While in-housing is a trend that appears to be dominating, agencies should not see it as a threat, they should instead, embrace the change so that they can become part of the solution - the time has come for clients and agencies to come to a new understanding.