November 28, 2019
In our recurring Q&A series, we ask Marc Cooper – President and Partner at Junction59 – to share his point of view on a wide range of industry topics.
On this edition of Question Marc, we take a look at in-house agencies: the good, the bad, the pros, the cons. Great read for clients, and for agency folk.
There are really a number of reasons why the idea is appealing to many brands.
In a digital world, volume of work is a big deal, whether it’s testing of creative or offer, or simply the sheer number of ad unit sizes that need to be created. And then that volume goes exponential if you need to tweak an offer in a competitive market. And of course, with volume, at an agency that often means exponential fees.
Then there is control over your brand. Today many brands have several agencies involved on a daily basis, each with specialties, like Brand, Consumer, B2B, Multicultural, Social, PR, Direct Marketing, Research, Experiential, Video, Design and of course Media. With so many different agencies involved it’s hard to keep the brand consistent. A subtle change here or there and it can quickly add up to look disjointed to your audience. Bringing it all (or mostly) in-house gives you the chance to control it.
To be honest I think the jury is still out on whether it’s actually working. I think for the most part, scale of your marketing activities is what drives at least the opportunity to go in-house with your agency activities. But even with scale, that doesn’t mean that it will work for everyone; we only have to look as far as Pepsi’s Kendall Jenner spot (watch on YouTube) to see where things can go wrong.
If you’re a smaller brand it’s going to be difficult to create an in-house team that can do everything for you; it’s the jack-of-all-trades master-of-none problem.
Volume and speed at a reduced cost, and greater control. Of course, the reduced cost statement assumes the volume can be sustained throughout the calendar year, so you are not carrying an agency team without the workload. Ad agencies with multiple clients can more easily absorb the often fluctuating or cyclical nature of many brands. I’m not convinced brands are getting all this, and I’m not sure that agencies can’t provide it.
No matter how big your brand or how busy you might be there’s no way replace the exposure the creative teams, planners, strategist and account teams might get in more traditional agencies. Whether directly or indirectly, agency people work for multiple clients and are exposed to all their challenges throughout the year. There’s a ton of learning across disciplines, industries and segments they get to bring to the table. That diversity simply can’t happen if you’re focused on one brand or worse yet, one channel and one discipline.
And of course, if you’re a smaller brand and you need to try a lot of different things across different channels it’s almost impossible to staff an internal team for each of those tasks and still stay on budget, so a more traditional agency model is likely still your best bet.
This isn’t an agency specific answer, it’s really more of a general business answer. Find out why your clients (or other brands in the sectors you target) are considering bringing an agency in-house and change your business practice to help them with their challenges.
If they’re bringing their team in-house because they’re looking to turn things around quicker, consider changing your model to address that challenge. At J59 we offer an express service for clients which removes some of the senior talent and some of the agency’s traditional checks and balances, allowing our team to work as an extension of our clients’ team to deliver quickly.
If they’re bringing their team in-house because they’re looking to save money, maybe step back and evaluate how you charge for your service. More and more agencies are moving to a value model instead of an hourly fee-for-service. This is usually a mix of reduced fees plus compensation based on meeting a business objective. When you think about it, this is actually how a brand’s internal team would be compensated; the base salaries and overhead are covered, but the profit which is equivalent to a staff bonus is based on how the brand is doing and if it’s meeting its business objectives. In many cases this can be more profitable for the agency and brand, as both strive to achieve a common goal.
A lot of agency people are reluctant to go in-house as they worry their focus will be too much on one brand and they might lose touch with the broader industry. There is sometimes fear that they would always do the same few things, and that can be a tad bit boring. That could be mitigated by brands with a history of innovation, and one creative person I spoke to suggested that brands with a history of partnering with other brands might offer the variety needed to make the switch. And let’s not forget that even agencies struggle to keep the best talent for more than a few years. The best people want to hone their skills and stay challenged by being exposed to a variety of situations and that often means brands.
Some worry about the culture inside a large corporate brand and how it might not match with the culture that they have come to know and love.
Before they make any final decision, I’d suggest they sit down with their agency partners and talk about why they are considering going in-house, and what are the key challenges they are experiencing in their current relationships. Then I suggest they ask the agency if they want to work with them to find a mutually beneficial solution. And if they still decide that going in-house is the best decision, then I’d suggest they go in with their eyes open. Set realistic expectations about what you can and can’t achieve, and determine when you are going to need help from agencies to keep your brand fresh and relevant. Then, build those relationships with your current or new agencies to help you do just that.
Marc Cooper, Chartered Marketer, is the co-author of a soon-to-be-released eBook simplifying the B2B Buyer’s Journey, for which he led a first-of-its-kind research study, in partnership with Ryerson University, aimed at redefining the way we target and reach small businesses in Canada.