Brands have stopped using the threat of in-housing to save money and are becoming more open to flexible arrangements with agencies based on specific marketing needs. This is because, according to Merkle’s vice-president, advertising consultancy, Toby Benjamin, marketers are having conversations about what the agency of the future should look like.
Last summer’s decision by Vodafone to in-house digital media buying was seen by many as a seminal moment in the industry – a big brand wresting a major marketing service from an agency’s traditional domain.
However, in the past year there have been few large brands that have made similar moves. According to Benjamin, clients have "started to rationalise why they are doing it".
He told ±±¾©Èü³µpk10: "It used to be a procurement-driven exercise or a reason to kick an agency that they feel was not treating them fairly. But more clients are approaching this with an attitude of ‘I want to do better marketing but what’s the right balance to, for example, accelerate my digital maturity and have the control that I need?’"
In March, Vodafone said its biddable, digital media buying should be at least 10% more efficient a year and save tens of millions of pounds after bringing it in-house from WPP’s Wavemaker.
While PepsiCo has not made as dramatic a move to in-house as Vodafone, its director of media, Josep Hernandez, is open to in-housing as part of a wider project to improve his marketing capability (as opposed to saving money). For example, PepsiCo has a "buy your own media" programme in which marketers periodically sit on the media trading desk.
In May, Hernandez told the Programmatic Pioneers conference in London: "It’s not about in-housing. It’s about upskilling and building capability internally, so you can get greater control of your advertising spend."
Packaged goods companies (CPGs) such as PepsiCo are the slowest to in-house, Benjamin explained, because they are more complex and weighed down by legacy systems. Deliveroo, for example, "already has people that understand how to do this kind of marketing internally", he added. "The big CPG buys are broadly on the same path, but slower."
And yet there is a danger that brands can underestimate the costs of in-housing in cost-benefit analyses led by procurement or finance divisions.
Sam Day, Confused.com’s chief marketing officer, told ±±¾©Èü³µpk10 that in-housing tends to cost more than brands initially think but the gains in terms of performance tend to be stronger than estimates say.
"It’s driven by the tech costs of running accounts on the cost side," Day said. "On the performance side, it’s linked to teams being laser-focused on one brand account and caring about the success of their business."
Paid search and SEO are the most appropriate functions to in-house, Day added.
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