A crystal ball for 2019: how the in-housing debate will evolve
2018 will go down as the year in which advertisers spent a huge amount of time and energy debating whether they should in-house or outsource different elements of their marketing supply chain. And while the debate has often been led by digital creative production and digital media buying, it’s been much broader than that. As technology, capabilities, and tech partners have evolved to help bring in-housing within the reach of many more brands and marketers, the opportunity to take direct control of all aspects of marketing has dominated discussions. In client meetings. In pitches. And on marketing conference stages around the world.
Why brands go in-house?
2018 has been about more than just talk, though. It’s also been about brands taking gradual steps towards greater internal marketing capabilities. Many brands are dipping their toes in the water and in-housing larger portions of their marketing operations. According to a recent ANA report, there has been a 34% increase in the number of in-house agencies. And while there are always learnings from these efforts, we are generally seeing signs of success: 79% of respondents in the same ANA study are satisfied with their internal agencies.
Consider Honda UK, which launched the Engine Room as an internal content hub. Honda can now make content and copy changes in an hour, whereas it used to take up to a month working with its agencies. No wonder an ISBA survey last year showed that 68% of advertisers were frustrated by the length of time agencies take to turn around briefs.
Another example is Ford which, as part of a massive restructure of agency responsibilities, is adding 100 new, in-house marketing positions to invest in areas including brand design, digital labs, media tools, and partnerships. The company expects to save $150m annually from this in-housing investment.
Also, Vodafone, which will manage two-thirds of its estimated $200m digital spend in-house. This includes making all biddable buys themselves, including the majority of search, social, and programmatic. This is expected to save significantly over previous, agency-led arrangements.
The locus of control is shifting from all resources provided by external partners to more of a balance between in-house and outsourced teams.
In-housing trend of the future
2019 will mark a change in the discussion. It will be the year that the in-housing debate will start to mature and elevate from a tactical discussion (i.e., whether to outsource a specific function) to a more strategic one (how to optimize your marketing ecosystem more broadly). In particular, it will be a discussion of how to create the best hybrid model that incorporates both internal and external agencies. It will be a year when we hear much more about how brands can maximize potential from all their external agency and tech partners. As we all agree, the marketing ecosystem is more complex than ever, and brands need external partners to help them get the best value from it.
Agencies and tech providers offer a huge amount of value to brands, and in-housing some elements of the marketing supply chain – whether elements of creative production, data, or media buying – should not be seen as a threat by the media industry. Rather, this trend is an opportunity to realign, reinvent, and redefine around the needs of brands, particularly in making sure the right functions are performed by the right teams, in the right places.
There are three important areas which I believe brands and agencies will address in 2019.
1. Agencies working on-site. Many brands – from McDonald’s to Ford – find that when agency teams work on-site, they can work faster and collaborate better, producing better results.
2. Consolidation and client-centric operating models. Big brands with multi-market exposure are cutting the number of agency partners they work with, giving more responsibility to those they choose as their partners to design solutions around their clients’ needs.
3. More flexible contracts. With the locus of control shifting, brands will work with agencies to rethink contracts, including specifications on rebates, data ownership, and audit rights.
The in-housing discussion and movement will certainly continue. But in 2019, the debate will move on from simply “taking back control” – a debate driven by concerns around transparency – to a more nuanced conversation about “maximizing value from partners”.
To see Ebiquity speak further on this topic, register to attend The Drum's US Predicitions event on 23 January 2019 in New York.
Jim Mason, senior partner, Ebiquity North America
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