There’s a strange, almost celebratory feeling among some agency execs that the latest existential threat — in this case, clients handling their marketing work themselves — is receding.
“These days when I hear a client wants to take things in-house, I sit back and laugh,” said one gleeful head of media at a global holding company agency over breakfast last week. “Let them try it. I’ll help them try it. They’re going to come crawling back.” Some of his peers, also at breakfast, agreed. “They’re finally figuring out why being an agency is so difficult. They’ll come back.”
They have, in some cases. A big one this year was Intel, which shuttered its internal agency, Agency Inside, early this year. Vodafone, which last year said it planned to buy most of its online media itself, stumbled on the programmatic advertising piece of the puzzle and backed down from that plan. And while a lot of talk has focused on in-housing as a panacea, many marketers, like Nissan and Duracell, which do some ad buying themselves, still work with agencies for the vast majority of their execution needs. At GlaxoSmithKline, which has spent a large part of the past two years trying to figure out what an in-house approach looks like, the result is that it’s doing some planning work itself, but still working with Publicis Media for the majority of its $1.6 billion global media account.
Last year, marketers taking agency capabilities in-house elicited feelings of fear and trepidation among ad agencies. They worried that this would relegate them to being less about strategy and left to do low-level execution that brings with it low margins and less ownership over the brand. But it seems like all that is out the window. Brands have found taking agency capabilities in-house is hard, harder than expected. Digiday research found earlier this fall that 75% of marketers said they’re finding programmatic ad buying very difficult to do themselves. They also said they found traditional media buying, and even creative production difficult to do.
And hiring people is also hard: Another research survey conducted this winter found that in-housing makes it hard to retain staff, even though it may improve some speed and reduce some marketing costs.
It makes sense how happy agencies are now that that reality is taking hold. In-housing, perhaps more than any of the major shifts that have rollicked the agency business over the past few years, has the potential to really rock the foundations of the agency business. The business was built for a different reality, one focused on large scale, mostly TV campaigns, and not for the digital media age, which requires more speed, more agility and more execution. While agencies are useful for strategic expertise that can come in handy, brands taking capabilities in-house is — or could be — the most impactful blow to the business. But now the pendulum’s swinging back. As one U.K.-based marketer put it recently, “Agencies are acting like the cat that got the cream.”
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