Shifting Strategies: Brands Do The Doing, Agencies Provide The Advice

Shifting Strategies: Brands Do The Doing, Agencies Provide The Advice

Marketing automation was always going to change the relationship between brands and agencies. With the potential to store their own data and act on it through tools they can learn to programme themselves, brand marketers have only been a step away from bringing control of some, or even all, of their routes to market in-house.

This is already prompting some stand-out brands, such as optical retail chain Specsavers, to commission data management platforms and handle media requirements themselves. Not all will go this far, but experts are widely predicting that brands will start to switch to using agencies for advice on building in-house resources and support on longer term strategy. According to the Association of National Advertisers (ANA) in the U.S, the rise of in-house agencies has gone from 16% of brands in 2008 to 58% in 2013. It’s the result, the researchers suggest, of CMOs being asked to do more with less.

U.K. Post Office Gains Independence

One major British brand going through this process is the Post Office. CMO Peter Markey believes that putting more emphasis on in-house marketing teams, supported by agency experts, is the future. He is in the process of building an internal data analytics “Centre of Excellence” and has taken the brand’s content operation in-house. Internal resources have been boosted to support both projects with full-time employees as well as experts “insourced” from supporting agencies.

“I’m always a big believer in being able to do things yourself, rather than rely on an agency,” Markey says. “The thing you have to consider, though, is the time it would take to hire the right people and how you can build up and dial down resources as you need them. You want people in your team, for proximity, but you generally want them now. That’s why we’ve gone for insourcing a small number of staff from our agencies.”

Markey has been working with the agency Oliver on content and a combination of Manifesto, Ogilvy and Rapp on data analytics.

“Content’s a great example because you want people within your team that know your business and can get going without the need for agency briefings,” he says. “You need to be quick to pick up on trends that you’d miss if you weren’t working with people internally. It’s the same with data and ultimately the experience and knowledge we’re bringing in from agencies is likely to empower us to be able to do more by ourselves in the future.”

Having internal resources from agencies sitting within his own team not only gives Markey access to the high-level strategy and thinking from agencies’ central offices but it saves money. The Post Office’s digital and marketing teams number around 70 permanent members of staff, who are bolstered by, typically, fewer than ten insourced professionals. The savings add up to a six figure sum annually, Markey estimates.

CMOs Need Consultants

The fundamental shift in the relationship between brands and agencies has already prompted Dentsu Aegis-owned digital performance marketing agency iProspect to form IP Consult. Ben Wood, global president of iProspect reveals the firm, which advises brands on how to set up their own marketing technology in-house, was founded around the realisation that many brands now see some agencies as an unnecessary middleman.

“Now marketing is becoming more digital and more data-driven, it’s being delivered by tools that brands are realising they can use themselves without the expense of a third party,” he says.

“We’ve seen it already with the digital giants and start-ups, where it’s normal to do most marketing in-house, and we’re starting to see it percolate through other sectors. We’re getting a lot of enquiries from big names who are considering setting up their own data management platform and then plugging themselves in to a demand side platform to run all their media themselves.”

Three CMO Questions

This trend is placing pressure on agencies to make themselves a valuable partner who can demonstrate where they add value, rather than simply sitting between tech providers, trading desks and a client, raising transparency concerns. To see where their agencies fit in with this new development, Wood believes CMOs need to ask three questions.

“It’s a big undertaking so CMOs need to ask themselves first of all, do they have a transparency problem with an agency?” He says.

“Then they need to ask if their agency adds something unique which adds value. If the CMO is tempted to go it alone, they then need to ask if they have the appetite for change because it requires a shift in internal capabilities. There can be budget savings and more bangs for your proverbial buck but it requires a firm commitment.”

Don’t Get Carried Away With Tools

The creative side of the industry is still an area left largely unaffected by this trend. However, Phil Rumbol, founding partner of creative agency 101, warns that brand marketers need to be wary of the indirect impact. He is well known for pushing through the idea of the drumming gorilla while at Cadbury’s, an idea he believes corporates would never go for if generating their own creative ideas.

“Smart brands go to creative agencies for ideas from people who don’t think like them, so creative agencies are not directly affected by this trend,” he says.

“My fear about the current development to take automation in-house is that brand marketers will feel it’s the answer to their problems, that they can do a load more digital targeting with the latest tools. All that will do is annoy people even more and send ad blocking through the roof. That’s what marketers have really got to be careful about, using this tech for the sake of it and stopping customers from engaging.”

Deciding Where Agencies Provide Value

Clearly there are pros and cons to the new trend for deepening in-house capabilities which take time to develop. However, with digital marketing becoming increasingly data-driven it is likely CMOs will continue to question where agencies provide value and if they are not better retained as strategic advisors who can help set up an internal capability and then offer strategic help and support on its ongoing campaigns.

It may be a major undertaking but CMOs who are making the leap are reporting major budget savings as well as benefits from being closer to customers through marketing decisions being made, executed and analysed internally rather than through a series of agency briefings.