It wouldn’t be a period of penny pinching in advertising without the in-house topic coming into sharp focus again. So here it is, the perennial reality check on how (and how not) marketers are using in-house teams to exert more control over how their ad dollars are spent.
On the surface, not much seems to have changed since Digiday’s last recap (which we published in April 2021). The big advertisers continue to take on more of the skills that are going to be of strategic importance to their businesses while leaving everything else to their agency to handle. Dig a bit deeper, though, and there are clear signs of something more transitory.
Namely, that there’s been a pivot on the things advertisers take in house. It’s not biddable media anymore — i.e the stuff that isn’t scalable, doesn’t deliver much competitive advantage and is riddled with hidden costs
Instead, advertisers are prioritizing skills like data science, analytics, insights and commerce. Or rather, the areas that are of strategic importance to businesses. A rudimentary search of the jobs boards’ for some of the top advertisers bears this out.
Unilever wants a data analytics specialist for its commerce team; Procter & Gamble is looking for a marketing technologist; Diageo wants a global head of commercial insights and analytics; Nike is looking for a consumer direct marketing specialist; Nestle wants a direct marketing lead.
None of these roles are typical of the in-housing wave of recent years.
“The direction of travel for the in-housing trend is increasingly toward hybrid and away from tactical media buying,” said Ryan Kangisser, managing partner of strategy at media advisory firm Mediasense. “These businesses still want in-house media and ‘heads to keyboard’ expertise, but in areas which deliver strategic value to the brand such as analytics, audience management, customer experience and e-commerce.”
It’s more valuable because the premise isn’t based on a lowest common denominator view of how the in-housing trend works. Marketers aren’t scrambling to use one demand-side platform or one ad server. Neither are they trying to run these teams as lean, exercises in cost controls. This still happens, of course but it’s not the overriding rationale like it once was. It couldn’t be. Not when the road toward those cost efficiencies is littered with dashed hopes and disbanded teams. Coca-Cola can attest to that. It seems others can too.
More than four (43%) in 10 marketers across the industry believe doing more marketing internally is an operational nightmare, according to a study of 15 CMOs in the U.K. who were surveyed by Collective. Most (80%) of those surveyed think in-housing could be improved, while 77% said they would consider using a different model.
“Ultimately, in-housing was a way of making cheaper stuff that no one is looking at anyway,” said Abba Newbery, CMO of sustainable financial firm Circa 5000.
The marketer would know better than most about the fallacies of the oft-hyped trend. She’s actually been at the forefront of an in-house plan — the one erected by News U.K. several years ago. Unlike other in-house models, this one was a hybrid as in it was calibrated around a marketing automation process, a strong creative agency in The&Partnership and the publisher’s own in-house studio. The critical part of the plan? The agency, no doubt.
“I think the in-housing push created a false economy of sorts, and I think if marketers really want to earn someone’s attention then they need to go to the companies that are best in class,” said Newbery. “Sure, an advertiser might have some world class creatives they have access to internally, but most of those businesses aren’t structured that way. They need the best talent to create the best products and services for people.”
Perhaps, the biggest indicator of these frustrations is the fact that advertisers aren’t taking shots at agencies any more — or at least not as overtly as they once did. It’s no secret that a lot of the underlying motivations behind many in-house teams stemmed from advertisers being unsatisfied with their agencies. That doesn’t seem to be as much of an issue these days. For starters the likes of Brainlabs, JellyFish, Collective to name a few continue to build businesses on the back of in-house models that are far clearer on what an effective set up looks like. Hint: it’s not cost saving.
Then there’s the fact that there aren’t as many advertisers leaving agencies as there have been. Yes, some of this is due to the economy but it’s also a tell that the always capricious dynamic between advertisers and agencies is relatively settled for now. And there’s little sign that it will be upended anytime soon if the latest earnings update from the largest ad agency groups are anything to go. They’ve raised their forecasts for the year despite the advertising slowdown. The stream of crises since the onset of the pandemic has left many of the largest advertisers more reliant on agencies than ever.
“We’re seeing a real interest in creating a hybrid model where you have a mix of creative, performance, analytics and attribution all in one model,” said Chris Shadrick, strategy partner at Collective. “It’s basically an end to end offering, from the point when someone comes up with an idea, right the way through to looking at the results it delivered as an ad, whether that’s sales or brand uplift.”