Are in-house agencies eating your lunch?

Following the publication of the Shift Happens paper on the evolution of in-housing and what it means for agencies, Janet Markwick and Rhona Glazebrook were invited to speak at the Campaign in-housing summit where they debunked some of the myths that still surround in-housing.

“Agencies that wish to grow existing business or unlock new business opportunities must relinquish the idea that in-housing is a threat. Instead, they must focus on identifying the role they want to play in building and growing successful brands. This requires a shift from being suppliers of marketing services to becoming true integrated partners, ones with an inside out understanding of their client’s business. It also requires agencies to embrace and respect in-housing as an intrinsic part of the ecosystem that will help them succeed.” (Shift Happens, July 2023)

1. It’s all about saving money, isn’t it?

That’s not quite true. Whilst cost saving is often the going in point, many of the brands present at the summit acknowledged that cost efficiencies rarely live beyond year one. However, as brands develop their in-house operations, they realise additional benefits such as speed, greater agility, and creative insight.

For Paul Hewitt (Global Head of Creative, Deliveroo) one of the main benefits of in-housing is control over the brand. Deliveroo has grown at a furious pace and prior to their brand relaunch, the marketing team were frequently discovering brand inconsistencies. By bringing control of the brand 100% in-house they have been able to relaunch quickly and successfully across multiple markets, whilst considering global nuances and foodie habits.

Efficiency and effectiveness become the new focus for marketers after the initial cost-saving honeymoon. Whether it is through tech, media insight, consumer insight or a more flexible utilization of talent, IHAs seem to be constantly finding new ways to make their marketing dollars work harder.

This, in turn, has made marketers impatient with what they perceive to be agencies’ stagnation and lack of agility. There was much nodding in the conference room at this observation from the 2020 WARC & Medialink report.

What does this mean for agencies? Agencies must take a long hard look at their value proposition in the context of today’s marketing ecosystems. This means interrogating everything from where and how they work, to the shape of their ideas and even how they price to better fit their services to their clients’ marketing needs.

2. Brand beats big idea

The big idea is dead, long live the brand. Many of the brands that took to the stage during the summit were celebrating a newfound freedom from the tyranny of the big idea. Whilst they were militant about the application of their brand identity and the red thread of their brand strategy, they were often less concerned with sticking to one dominant creative idea, instead prioritising work that is fit for platform and capable of responding to consumers in real time.

On this note, the team from Kraft Heinz’ agency 'The Kitchen' shared their Cannes-winning Heinz Boat Man case study and explained how moving “at the speed of culture” often requires a relaxation of campaign rules and production values but always required them to be faithful to what they call the “brand plate”.

What does this mean for agencies? Agencies need to adapt their creativity and their ways of working to be more fluid and reactive where needed. This might well require relaxing the stranglehold of creative concept. Conversely, there is still significant opportunity for agencies to continue to protect and promote the power of long-term investment in the brand, though this should be coupled with a constant quest for new ways to deliver the brand message. (What better example than the recent Barbie movie?)

3. Truly madly media

There’s love in the air and it doesn’t always require external agency matchmaking. Bigger brands such as Vodafone, LEGO and Kraft Heinz celebrated the value of snuggling up to their primary media channels to gain greater creative insight and more transparency in their dealings.

The topic of transparency was raised several times by the brand speakers and echoed the Media Sense report, issued only weeks earlier, stating that, "24% of major multinationals believe the current media agency model is "not fit for purpose".

It’s true that this media cosiness is harder for smaller brands to afford, but that doesn’t stop them trying. We heard of several different media models in play which spanned everything from outsourced media planning and buying, to blended media models where media planning was brought in-house, but the buying was still managed by external media agencies.

What does this mean for agencies? Media agencies are still perceived to add value through their industry insight, their smorgasbord of martech (which is hard for most brands to match in-house) and their ability to train IHAs. But is this enough? As marketers are realising the benefits of bringing creative and media together, they are discovering new ways to build more integrated media and creative activities.

We wonder if it’s time for a recoupling of these disciplines in external agencies. What’s clear is that media is now driving creative just as creative drives media... so uniting these disciplines more firmly together could be a powerful formula for agencies.

4. Kindness is the coolest

Who didn’t warm to the lovely Paul Hewitt for his recognition of the struggle of working parents as well as his openness about his own health challenges (which he put down to working under extreme industry pressure). Paul now champions work life balance, tolerance, and diversity in the workplace. A top-drawer Creative Director giving staff welfare top drawer priority? Pretty powerful stuff.

Where does this leave agencies? It was clear from Deliveroo and many other brands in the room that IHAs are walking the talk when it comes to staff well-being to find better work life balance and greater respect. Agencies’ struggle to attract and retain talent has been well documented recently. This article from The Works suggests that whilst salary-for-salary IHAs and external agencies were on a par, when you examine the benefits offered by IHAs the balance tips in favour of working in-house.

5. The democracy of creativity

In stark contrast to the agency ‘creative rock star’, there was a real sense of creative democracy within IHAs. Mat O'Brien (Executive Creative Director at Three UK) talked of the need to keep egos in check to build an inclusive creative culture.

Since he has been at Three, Mat has instilled new ways of working to develop a more democratic creative culture, e.g. Three Mobile’s Creative Council where creative leads from in-house and external agencies work shoulder to shoulder to improve the work and build stakeholder confidence.

Mat is also busy diversifying his creative resources by looking outside traditional agency talent. Three Mobile drew on influencers to provide some of the creative material for their highly successful ITV Gogglebox sponsorship.

LEGO also source creative talent from a wider pool, including gaming, influencers, and film. Claire Miller, Global Head of Strategy & Analytics at LEGO explained how this creative diversity, coupled with a significant investment in strategic talent, has helped LEGO move beyond a single product focus to building and designing entire brand platforms (e.g. LEGO City).

The democratic nature of creativity within IHAs enables greater flexibility too. Whilst in-house creative talent might not get to work on a range of brands, the quid pro quo is that their skills are constantly being applied in new ways, to different areas of the business. Both Deliveroo and Sainsburys (Zest) spoke of pivoting the skills and interests of their staff to meet new demands.

Where does this leave agencies? As agencies continue to face a well-publicised talent crisis perhaps, they should take a leaf of out IHAs’ book and look at their talent in a more holistic way, exploring ways to flex and stretch their own staff in new directions, as well as continuing to form new creative partnerships.

6. Celebrating the cutting room floor

In-housing has its challenges, there was unanimous agreement on this. There continues to be numerous roadblocks in terms of stakeholder buy in, securing talent and unravelling legal complexities, but brands are pushing through these. Marketers are learning, adapting, and transforming their processes and outputs all the time. Rob Quartermain, Head of Creative & Operations at Zest (Sainsburys’ IHA) encourages his team to go after new things all the time, celebrating the cutting room floor as a way of developing faster.

The energy, optimism and open mindedness in the room was palpable. As was the humility, lack of swagger, and the honesty. It was real growth mindset stuff, and the results speak volumes.

• Sainsbury’s in-house agency Zest is 42% up year on year.
• The Kitchen from Kraft Heinz has gone from 10 to 100 people in just a few years.
• LEGO’s in-house agency is now 400-strong.
• Vodafone’s in-house agency do all their digital buying which accounts for approx. 50% of their media spend.

IHAs’ growth is reflected in the ISBA findings that showed 90% of UK marketers were using or considering in-housing and more than half believed the in-housing trend would continue to grow.

What does this mean for agencies? This does not have to signal the death of agencies. Many of the marketers present at the summit agreed with Rob when he said, “We can’t win without them and they can't win without us”. But there is certainly a need for agencies to change to survive.

In Conclusion; lean in.

Through stronger partnerships with IHAs, agencies can gain a clearer understanding of the value they can add to today’s ecosystems. Perhaps it is time for agencies to stop focusing on whether in-housing is eating their lunch and instead trying a bite or two of the “in-house sandwich.”

Rhona Glazebrook and Janet Markwick create bespoke business transformation programmes to drive growth for brands, agencies, and production companies. They also offer consulting, coaching, training, and mentoring. Their style Is pragmatic, and action focused… making a real difference to all parties at the table.

The IPA are pleased to offer members an exclusive 25% off Rhona & Janet’s next workshop, “Working with in-housing to build value”. This workshop is designed to help agencies, IHAs and brands transform their partnerships to make every marketing dollar work harder. To claim your member discount, use the code SHIFTHAPPENS and book before Monday 29 January 2024.

The opinions expressed here are those of the authors and were submitted in accordance with the IPA terms and conditions regarding the uploading and contribution of content to the IPA newsletters, IPA website, or other IPA media, and should not be interpreted as representing the opinion of the IPA.