In-housing or ‘right-housing’? A hybrid way of working or an agency of record? Brands have pick of the bunch nowadays when it comes to choosing an effective agency model that works for them.
According to a recent study though, many of the world’s biggest advertisers are increasingly plumping to in-house their creative teams. In September, the World Federation of Advertisers (WFA) and The Observatory International found that the coronavirus pandemic has accelerated the trend to the tune of 57% among multinational companies.
It’s not just creative either. Growth in digital opportunities has led to a rise in in-house agencies, with 74% being established in the last five years. In just the past year, businesses like Nestlé, Hertz and Anheuser-Busch have jumped on the trend.
Brand marketers are pursuing in-housing for predictable reasons, such as cost efficiencies (30%), better integration (64%) and better brand knowledge (59%).
But just how do brands get in-housing right? As part of The Drum’s Agencies4Growth festival last month, we hosted two panels addressing the topic featuring clients who had made the move like Shell and Arla, as well as in-house specialists, consultancies and ad agencies.
Here, we explore the different perspectives offered by each as to how brands can nail their pivot to in-house as well as how agencies and in-house teams can work together.
The client: ‘You can’t create an in-house team in isolation’
Thomas Heilskov is director and global head of digital marketing at The Barn, Arla Foods’ in-house creative agency. For him, a hybrid approach has paid dividends.
“If you go down the route of a creating an in-house team you cannot do that in isolation – you need to look at the full landscape of your partners,” he says.
When The Barn was founded in 2018 to service some of the FMCG giant’s biggest brands (including Lurpack, Castello and Anchor) it brought content marketing and ad production in-house. Social media too. However, the brand was keen to still work alongside agency partners like Carat and Karmarama.
“From the outset we’ve been clear with our partners on what our ambitions are and what their role is,” says Heilskov. Looking at the totality of different partners and being really clear in your roadmap and what’s expected of them is needed.
Building trust between your internal team and your agency partners is key to making this setup work, he says. “An in-house model is a good way for global brands to make a simpler model. We used to have a lot agencies across different markets. Now we’ve centralised and simplified we can streamline our processes and best practice in line with that.”
However, going down into a hybrid model has added a little more complexity for the advertiser’s own marketing team – which now needs to work with its in-house arm as well as agency partners.
“The ability for your internal team and agencies to act as one team and support the brand they’re working on is key. We need to work together. The partners that we work with can also see the benefit of bringing ideas to life that we wouldn’t be able to afford if we didn’t have the setup that we have – it allows us to work with a bigger variation of creatives and use data better. There’s a benefit to the agency in having this talent in-house.”
He also recommends positioning your in-house team as a partner to help agencies navigate the complexity of the client in order to sell in ideas.
“We work together with our agencies before presenting work to Arla, as we have the expertise on how it will a land,” he reveals.
The in-housing agency: ‘People, processes and tech – that’s what underpins good in-housing’
“The things that underpin great in-housing are people, processes and technology,” asserts Sharon Whale, chief exec of global markets and operations at Oliver – which has helped brands like The Guardian and Unilever bulk up their internal arsenal.
“Clients who are in-housing have to go through an organisational change process. If the client isn’t committed to rewriting their processes fit for 21st-century content and optimisation at speed and rethinking how they do business, it’s not going to work.”
She also says that for in-house teams, having a transparent relationship with their client is “critical” to success.
“If you’re using external suppliers like us to do it then the rules remain the same, it’s a people, process and technology play.”
Too often, in-housing gets abbreviated to “on-site”, says Whale. “That’s certainly not the case right now thanks to Covid-19. Other than being a mindset, in-housing is about creating bespoke solutions and now more than ever, suppliers and agencies have an opportunity to provide clients with the best ‘borderless’ talent wherever you happen to be in the world, to create exactly the right solutions and be agile.
“The pandemic has actually opened up in-housing for clients in a way that wasn’t possible before. It’s not just about being on-site.”
The ad agency: ‘Agencies should be the chief facilitator’
While the stats hint at a decline for ad agencies, the WFA’s report found tha almost all respondents (95%) continue to work with external agencies. Approximately 37% of creative output now comes from in-house teams.
Brands with in-housing departments are still open to ad agencies‘ input too, with 40% allowing them to pitch against each other for projects.
Neil Barrie is chief executive officer at TwentyFirstCentury brand, which works with Airbnb and Headspace. He says there’s still space for agencies in a blended model.
“When you need a big perspective or a big breakthrough, it’s really helpful to have an external partner come in that is maybe a bit more empowered to be naïve and to be challenging,” he says.
“From the agency side, there needs to be a mindset shift about what it means to be a leader in a creative shop. [Before a pitch] the mentality used to be all ‘we’re going in to battle and we’ll take ownership of this and that’ and a lot of account handlers see their job as being to keep the clients out of the way… and so an open minded mindset is critical for success.”
Modern agencies, he explains, should be “chief facilitator” and ensure that are lots of voices in the room for a brand to lean into instead of dominating the conversation or project.
The consultancy: ‘Don’t misuse your in-house resource’
Rob Foster, senior consultant at The Observatory International, cautions brands not to take advantage of their in-house experts.
“You can’t drop an agency into a brand and think that’s the end of the conversation. You have to bring stakeholders on that journey.”
To do this, brands need to develop an internal culture that will drive the best results from their in-house experts and see it as a “transformation project”, adds Foster
In The Observatory’s study with the WFA, effective collaboration with in-house teams was one of the biggest challenges from both sides.
“Brands [should] want to bring their people on the journey with them. One in-house agency staffer told us they were getting briefed over WhatsApp. Proximity bred overfamiliarity. So it’s a business transformation issue, it’s not just about people sitting in an office.”
This article was originally published on The Drum