Why Pernod Ricard favors the hybrid in-house model
More advertisers are learning the hard way that replacing media agencies with their own teams isn’t as straightforward as it sounds. That’s why Pernod Ricard has taken a slower approach to creating its own in-house team, which involves using its agencies to buy the vast amounts of media it isn’t staffed to handle.
When the in-house team was created in 2014, Pernod Ricard’s marketers sat in a global hub based at the company’s headquarters in Paris. Since 2017, the global hub has been replicated so that media buying is shared at a local level across four regional hubs in North and South America, Asia and Africa. That structural change was necessary because the advertiser previously just bought global campaigns for its six sub-brands, including Chivas Regal and Havana Club International.
Today, the four additional internal media buying teams are planning and buying more local campaigns in their respective markets. The advertiser also has plans to set up its first European regional hub in Spain — one of its largest markets for total ad spending. Like it did for the other regional hubs, Pernod Ricard plans to hire five permanent employees and up to five freelancers depending on when there are seasonal campaign spikes.
Similar to other advertisers, the business has gradually bought more of its search, social and programmatic ads in-house, rather than attempt to do it all at once. That way, Pernod Ricard’s media teams take on more of the day-to-day ad spending tasks, such as managing whitelists of publishers in local markets, while its agencies are increasingly used as consultants, according to Pierre-Yves Calloc’h, global digital acceleration director at Pernod Ricard.
Calloc’h wouldn’t reveal what percentage split of online media Pernod Ricard’s marketers buy in-house but added that it wasn’t as high as the amount of content they produce, which is around 25-30% at a global level and 35-55% at a regional level. In fact, the amount is likely closer to what the advertiser bought in 2017, when a quarter of its online media was bought internally. Even if that amount has risen since then, based on Calloc’h’s vague estimate it would still mean only a fraction of Pernod Ricard’s media budget is spent by its own marketers given online media accounted for a third of the $150 million the advertiser spent on media last year.
As it stands, agencies still handle the bulk of Pernod Ricard’s media budget even if the advertiser has previously expressed a desire to reduce what business they allocate to them in order to cut fees.
“Our agencies have to use our global accounts so all the buying they do is linked to those profiles, which gives us access to the data,” said Calloc’h. “The majority of our ad tech is done through Google and Facebook, but in local markets we’re working with more platforms.”
Bringing ad spending in-house is theoretically supposed to make marketing simpler for advertisers because they should have more control over how their money is spent. But Pernod Ricard could be forgiven for wondering how sometimes. “Building a team isn’t easy,” said Calloc’h. “We’re looking for experts that cover programmatic, search and social but more importantly we need senior executives who understand how media has an impact on the wider business,” said Calloc’h.
To entice people with the right level of talent Pernod Ricard’s offers them shorter contracts. Advertisers struggle to attract the brightest talent in digital advertising partly because it’s hard to convince those candidates to ignore the lack of variety and clear career progression on the client side and leave their agencies or tech companies. But Pernod Ricard has made in-roads by offering talent shorter seasonal contracts, effectively freelance gigs, to plan and buy its media during peak periods like Christmas.
“Brands are still struggling to recruit in-house talent, particularly in smaller markets, and we’ve found that freelancers are not the solution,” said Brian Leder, chief strategy officer at consultancy Promatica. “We’re still seeing brands hire ‘hands on keyboards’ or other media staff, and more often than not they’re siloed and disconnected.”
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