In-house agencies are often pitched as a way to save money but the promise hasn’t always lived up to the reality. For those advertisers that bought into the promise of the in-house model, the coronavirus crisis is the ultimate stress test.
CEOs are pushing senior marketers to do more across a range of media channels with less. Some of those marketers think their in-house agencies are in a unique position to make those savings. The rationale being those in-house agencies can do some of the labor-intensive, commoditized advertising faster, cheaper and even better than agencies can.
“It is the agency’s job to provide perspective, but I’m not sure it is a major selling point right now,” said Andrew Sandoval, director of biddable media at Media Kitchen.
Since the onset of the pandemic, the workload for the one-year-old in-house agency at a global beverage manufacturer has swelled, said a marketer on the team. At the same time, work done by the advertiser’s agencies has dwindled said the marketer who was not authorized to speak to Digiday about anything related to the outbreak.
“The value of an in-house agency is the amount of money we’re able to save the business on certain aspects of our marketing as there are fewer overheads,” said the marketer. “Savings are also generated by how agile we’re able to work as a result of being closer to the business.”
Initially, the agencies, particularly the media and sponsorship ones, were kept on by the advertiser to either recoup or pull media dollars. But the more money the agencies saved, the less work there was for them to do.
The counterpoint to the crisis accelerating the trend to moving marketing in-house is that agencies are variable costs, easily scaled up and scaled back. Marketing departments, filled with full-time employees, are fixed costs.
“We’re not able to activate on certain parts of our contracts with agencies right now and so we’ve had to pause parts of those arrangements,” said the marketer.
In the absence of those agencies, the advertiser’s in-house team is creating more content. And while it’s not the big-budget, slick TV and sponsorship campaigns the advertiser’s agencies would normally manage at this time of year, it’s the belt and braces type of marketing the business needs to keep costs down and sales up, said the marketer.
“We’re more focused on producing trade marketing content because we’re seeing sales of products in supermarkets go up,” said the marketer.
In other words, the in-house agency has become a conduit for cost-effective, lower risk advertising in the eyes of the CEO thanks to the team’s intuitive understanding of its products at the same level as the company’s employees, said the marketer. Though many agencies can learn to navigate a client’s business over time, it usually pales in comparison to an in-house marketer who doesn’t have the distraction of working for other companies.
“The smart agencies are turning these issues into conversations with their clients about how they can help them find savings, said Donna Sharp, managing director at Medialink. “It comes down to agencies taking on a different scope of work for advertisers”
It takes time for the upfront costs of an in-house agency to turn into corporate savings, which is why most businesses are leaning on those that are already established like Anheuser-Busch InBev’s Draftline, which launched last year. In fact, some of those businesses are trying to grow their in-house agencies during these difficult times.
“While we’ve not had any clients dream up entire in-house media strategies on the back of the coronavirus we are starting to see an acceleration of initiatives that were already underway,” said Sharp.
Electronic Arts, Burberry, Playstation, Reckitt Benckiser, Bet 365, General Mills, Anheuser-Busch Inbev and GlaxoSmithKline have all posted job vacancies within their in-house media teams over the last three weeks to LinkedIn. While the requirements of each vacancy vary, there are some similarities, namely around the seniority of the roles and the maturity of the in-house team.
Electronic Arts is on the hunt for a biddable buying lead to work across its European markets, for example, while General Mills wants a regional media director for Europe and Australia. Each vacancy is a senior role within an established in-house media team. Electronic Arts began buying its own ads seven years ago, for instance, whereas GSK created an in-house team of programmatic traders last year.
Some advertisers would rather have the built-in flexibility agencies provide to be turned on and off in tandem with the vagaries of their marketing output during the pandemic.
“We’re looking to grow our in-house e-commerce at the moment but the external perspective agencies can provide is invaluable to us at the moment,” said a digital marketer at a food manufacturer on condition of anonymity.
The issue was brought into sharp focus earlier this month when the marketer was working through a plan to develop content that would improve the organic search ranking of its products.
“If I were to ask one of my colleagues on the e-commerce team here then they would tell me that there are one or two search terms we need to go after, whereas an agency exec would tell me that search marketing has to balance the volume of terms, phrases and descriptions that we have in order to get the best results.”
The marketer’s predicament points to the wider reality of the in-house trend that will no doubt crystalize throughout the pandemic. The pandemic is accelerating the development of in-house teams, but agencies aren’t getting sidelined. Their role is simply evolving.
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