- As more brands take their advertising in-house, a new wave of companies is inserting itself in the ongoing tug of war between brands and traditional agencies.
- These companies are helping brands do everything from hiring and setting up basic operational structures in-house, to handling content creation, media-buying and measurement.
- Brands including Unilever, BMW, Marriott, MasterCard and Pernod-Ricard are increasingly moving their advertising functions in-house.
When Simon Martin set up his company back in 2004 to help brands set up in-house advertising functions, he said people looked at him like he "was talking about sci-fi."
"That sci-fi has now become reality," said Martin, the founder and CEO of Oliver, a London-based company whose clients include Unilever, BMW, and Marriott.
As brands increasingly take their advertising in-house, Oliver and other companies such as Launch Angle, Wunderman Inside and MightyHive have inserted themselves in the ongoing tug of war between brands and traditional ad agencies.
These companies are helping brands do the work traditionally handled by ad agencies, such as hiring and setting up basic operational structures and handling content creation, media-buying and measurement.
A new wave of companies is helping brands become self-sufficient
In doing so, this new cottage industry is enabling big brands to rely less on their ad agencies.
Oliver, for example, embeds its own team members with its clients. It audits the client's processes, changes them as needed, and helps the client with creating content and gauging its performance.
"The idea is to put the right creative talent with the right skills close to our clients and give them the right processes and tech to make their lives easier," said Martin.
Another in-housing company, Launch Angle, was founded in 2018 by Keith Hernandez, who spent a big part of his career working in the content studio side for publishers including BuzzFeed and Turner's Bleacher Report. The company is more consultative than Oliver's and works with clients on a project basis, relying on freelancers and experts rather than a full-time team.
"In theory, brands should be able to become publishers and tell their own stories to connect with consumers," Hernandez said. "But the disconnect has always been in the ability to control so many moving parts. Brands have realized that they want to own a little bit more of their destiny and their data."
A third such company, S4 Capital's MightyHive, concentrates on helping marketers with their media-buying and programmatic stacks.
Brands are opting for in-housing for multiple reasons
In-housing is a growing trend, with 78% of advertisers in an October 2018 survey by the Association of National Advertisers saying that they had some form of an in-house agency. Marriott has a six-person content studio that services its 30 brands and the creative for MasterCard's recent logo refresh was led by its own team.
Some of the most common goals of in-housing are more speed, efficiency, control, and cost-savings.
The argument against using a traditional agency is that it can impede a company from adjusting advertising on the fly, costing the company money.
These new in-housing enablers, on the other hand, promise brands greater efficiencies. Oliver helped Unilever set up "U-Studios," which helps create content for Unilever brands, bringing down its costs by 30% in 2017, said Unilever CFO Graeme Pitkethly.
"We [Oliver] will be able to deliver hundreds of millions of dollars of savings to brands globally," said David Jones, whose brand-tech conglomerate You & Mr. Jones recently acquired Oliver.
But not every brand thinks it needs a helping hand from such external partners.
Spirits manufacturer Pernod-Ricard, for instance, initially sought help to set up its in-housing operations back in 2014, but ultimately built its content creation studios at the brand company level on its own.
"We didn't see the value of what they are suggesting," said Pernod-Ricard USA's digital marketing director Luis Spencer Freitas. "Their margins were taking over the company benefit."
Agencies are waking up to the challenge
Traditional agencies have come under fire from consulting firms like Accenture and Deloitte that are encroaching on their business and Facebook and Google that are raking in most new ad spending. But agencies are not oblivious to these threats.
That's why ad holding giant WPP's digital agency, Wunderman (now WundermanThompson), launched Wunderman Inside in March 2018. It offers clients services like social media command centers, CRM teams, and fully-integrated marketing teams. One of Wunderman Inside's biggest clients is Samsung.
"We believe that providing clients with an on-site agency capability, closely coupled to a much broader in-agency offering, provides clients with the best of two worlds," said James Sanderson, Wunderman Inside's managing director. "The time of the external-only, built-for-TV agency model is beginning to pass."
To be sure, not every brand is going the in-housing route or able to pull it off. Brands like Vodafone and Intel have recently scaled back on their in-house efforts, for example.
"The brands doing it themselves don't have the experience to run agency type businesses internally, and are realizing that it can go wrong," said Jones. "That's why these type of companies have been successful."
Wunderman's Sanderson said that while marketing teams and procurement see advantages in this approach, they want to minimize the risk of launching their own operation.
"There are challenges clients face in recruiting, developing and retaining top talent. This can be costly, distracting and dangerous if the quality of the work is inferior to that which an agency can deliver," he said. "We believe our solution delivers the benefits of in-housing, letting the client get ahead but without the risk."
