5 reasons why brands are cutting out agencies

This is the third story in the “New Agency Model” series, which is sponsored by PulsePoint™, a next-gen ad technology platform that fuses the science of programmatic targeting, distribution and optimization with the art of content marketing.

John Winsor is CEO of ad agency Victors & Spoils and chief innovation officer of Havas Worldwide.

Agencies lean on their status as “valued partners” of clients, but the reality is that your brand might not need an agency anymore.

There’s already a shift taking place. A recent Association of National Advertisers study which found 60 percent of Fortune 500 brands are thinking about replacing agency work with in-house capabilities. Building an in-house agency might be a large task, today, as many agencies cling to their old business models a whole new crop of alternatives are there to help brands both strategically and creatively.

Here are five reasons to rethink whether you need an agency:

Your marketing is real-time; your agency isn’t.
Marketing is all about speed these days. You’ve got to move faster and be in the conversation. In an Ad Age video interview, Stephen Quinn, CMO of Walmart, summed it up nicely: “What is best to be in-house versus what needs to be handled by our agencies is based on where the real-time marketing is happening. Those times when decisions must be made quickly by our merchant group and stores and then messaged to customer immediately, we have moved those things in-house. Likewise, our innovations using Facebook must be handled in-house to react quickly, as well. Lots of the work in traditional TV production is now in-house because we’re doing real-time ads in 70 markets across the U.S.”

Great ideas come from everywhere.
When technology democratizes every part of the marketing process from coming up with new creative ideas via crowdsourcing platforms to freely distributing content via social media, the creative process is no longer an expensive, scarce set of skills and talents. In fact, it’s impossible for one agency to have every creative and strategic asset to solve all of your problems. The only scarce resource these days is the ability to find and curate the best ideas and distribution channels in an abundant world.

You’re probably paying too much.
In general, your agency charges the way they’ve always charged. Technology has made things faster and cheaper but a lot of those savings have not been passed along. As a result, your agency’s incentives are often misaligned with yours. As media costs go from analog dollars to digital dimes to mobile pennies there’s no room for big agency overhead. Unilever CMO Keith Weed recently announcement to cut agency and production costs by 20 percent. When agencies cry foul over reduced fees based on the changing cultural and media landscape it could be caused by the fact that your agency works in an old fashioned, top-down manner with lots of overhead and waste.

You can’t outsource one of your most important assets.
In your personal life it would seem ludicrous to outsource your most important relationships. Could you imagine hiring someone to handle your communications with your spouse or kids? Likewise, the most powerful brands today understand that they have to own their critical relationships. Jonathan Mildenhall, the creative chief at Coca-Cola, “Coke had to take creativity in the widest sense back from the agencies. It couldn’t belong only to the hairy elites of agency creative departments.” It seems smarter to own the strategy and creative vision and outsource the execution of your ideas exactly the way it happens most of the time in the world of product design.

Agencies no longer have a monopoly on strategy and creativity.
Agencies used to live in rarified air, being experts at changing culture. Now, everywhere you look, the best, most interesting creative ideas are coming from people using the same tools agencies use or with new partners outside the agency world. Folks like Chipotle, Coke, Red Bull and GoPro have democratized creativity. Now anyone from Hollywood, Peoria to your media agency can use the same tools to be creative and distribute compelling content.

Smart brands are rethinking their dependence on agencies. Make sure all of your partners are financially aligned with your goals and are willing to work hard to achieve them.