With brands such as Nestle, Betway and Pepsico recently taking advertising matters into their own hands and making the move to in-house, the current trend is unlikely to wane.
Trust and transparency issues, downward cost pressures, and the weakening of brand and agency relationships have led a growing number of brands to bring advertising under their own roof, with recent studies revealing that 91% of European marketing decision makers have moved at least part of their digital marketing in-house over recent years. Yet, for many, the transition has proved easier said than done.
Lured by the promise of cost saving technologies and automation opportunities, many brands are taking the plunge without appreciating the scale and complexity of the task.
A lack of existing talent, skills and resources are some of the biggest barriers to building a competent in-house team. Three months after Vodafone announced it would take programmatic ad buying in-house, it realised the task was more complicated than anticipated and backtracked on the idea.
Similarly, flight-booking app Hopper realised it had bitten off more than it could chew when it tried to build its own Facebook buying tool to avoid paying service fees. The maintenance issues involved ended up costing more than the return.
A smart in-housing strategy begins with a brand acknowledging they might not have the skills or expertise to go it alone. Brands who aren’t afraid to ‘out-house’ their in-housing projects, and look to agencies for support, are the ones who will succeed. And there are so many ways that brands can leverage the specialist expertise of agencies, by merging them with their own capabilities in a hybrid model. Increasingly, we see companies such as Marriott and Adidas adopting this pragmatic and non-binary approach, paving the way for successful hybrid business models.
Of course, a hybrid approach can present opportunities for agencies too. Rather than running scared or burying their heads in the sand at the first sign of brands craving control, forward-thinking agencies can embrace in-housing and evolve their services to act as ‘in-housing consultants’ for brands committed to making the move. These agencies can understand a brand’s unique set of requirements and advise on the right people, processes and technology to deliver the right outcomes. And, most importantly, they can act as a true partner throughout their in-housing journey, helping the brand put the right strategy in place – from helping ensure they have the best mix of talent; to installing and educating about the most suitable technology; supporting automation, and providing ongoing support to ensure the project remains on track.
If brands are determined to take some of the lower value tasks in-house, agencies should be investing in up-skilling and diversifying their own talent to win a bigger share of the higher value work that brands do not plan to in-house.
Contrary to popular belief, in-housing doesn’t need to sound the death knell for agencies. Rather, agencies who view the move not as an existential threat, but as an evolution of the brand/agency dynamic will thrive in this new industry landscape.
Submissions now open for our Top 100 Digital Agencies report!
Submissions for Econsultancy’s Top 100 Digital Agencies 2019 are now open.