Rundown: For agencies, in-housing is a symptom, not a disease
One of the key slides in WPP’s annual report, released this week, essentially shrugged off in-housing as a threat to agencies.
In a section about “engagement in action,” it outlined what it says are the most common questions it gets from shareholders. One of them was if clients are in-housing media and creative, and how WPP plans to respond. The agency said that in-housing is “not at the heart of the economics of WPP,” and “in-housing is difficult,” particularly, it said, when it comes to the challenges of retaining and recruiting people. It’s an interesting tack to take, given the plethora of numbers around how much more brands want to take in-house.
Instead of in-housing, WPP is setting its sights on other issues. One goal is consolidation: the company has 100 mergers and 80 office closures planned for the remainder of the year, that will result in a gross headcount reduction of 3,500. Another is a focus on talent recruitment and retention.
But as one major (other) holding company executive told me this week, in-housing itself isn’t a cause, it’s a symptom, driven by larger, more structural issues that the agency world has to grapple with. Those issues are, for example, said this executive, increased importance placed on data, especially owning your own. Others are the example that so-called DTC companies are setting by owning the customer relationship from day one — and that includes owning the creative strategy alongside that. At WPP itself, this has been in sharp focus at Walmart, which itself took business away from Triad just last month in favor of building its own in-house marketing and media chops. It’s even interesting to note considering that last year, Unilever and WPP in Singapore attempted a new structure that would “in-house” WPP capabilities inside Unilever offices. That’s come on the heels of Unilever touting the benefits its in-house U-Studio has brought, including a 30 percent cost reduction as per the CPG giant’s 2017 annual report. With that as the backdrop, it’s hard to have the view that in-housing will have no impact on WPP’s business going forward. It will — it just may not be in the way the company expects. In-housing may not be a threat, but the structural issues driving it certainly are. — Shareen Pathak
Debunking addressable TV
There is a lot of hype around addressable TV advertising. And like anything with a lot of hype, it can be difficult to separate the hard facts from hooey. During a working group session this week at Digiday’s Future of TV Summit in Palm Springs, California, attendees lamented having to press pay-TV providers on their abilities to offer true addressable TV advertising, which they defined as TV ads targeted to individual households.
Before AT&T acquired DirecTV, both companies were out pitching advertisers on their addressable TV capabilities. However, while DirecTV was able to serve ads within live TV shows targeted to individual households, “AT&T was selling what they were calling addressable, and it was really lookalike modeling,” said one attendee.
Identifying AT&T’s addressable TV limitations at the time took some effort on the part of this ad buyer. Skeptical of AT&T’s addressable TV pitch, she pressed the telecom giant by offering to give them a list of the households that were existing customers of her client and asking if AT&T would be able to target those specific households. “They said they can’t,” the attendee said.
Other attendees acknowledged similar struggles in identifying who is and is not able to offer true addressable TV advertising. “It’s a lot of questions, a lot of phone calls,” said one attendee. However, even those calls may not lead to answers. “When you’re on the phone with [sales] reps, they don’t always know,” said an attendee. — Tim Peterson
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