Increasing fragmentation has taken place in the advertising world over the past 20 years with creative and media work being taken on by agencies. Now the trend looks set to go further with clients recognising they can do some of the creative work in house while working alongside smaller, specialised agencies.
TK Maxx did just this last week, announcing that it had appointed Clemmow Hornby Inge to create a “big” advertising idea, which will then be developed in house (MW last week).
Similarly, Ikea UK ditched St Luke’s in November to work with two smaller agencies together with an in-house team.
Moving away from the traditional client/advertiser relationships is not supported by all observers. However, the approach has perceived cost and creative benefits that are set to make all agencies look at the way they approach clients, and clients to look at what work can be done in house.
TK Maxx marketing director Deborah Dolce says her model has a precedent: “It’s something we have been working on for some time. Our sister companies in the US all do this. It’s a structural model that has a precedent in the business. The two obvious benefits are control and cost.”
Ikea UK marketing manager Anders Danielsson says that St Luke’s was good at creating brand building campaigns for the company, which will now be followed up by a second phase of tapping into the way people furnish their houses.
The company is working with two agencies – Karmarama on creative ideas and Outfit to advise on the use of different media. The in-house team will organise advertising production and administration.
Danielsson says: “With the new structure, one of our objectives was to unleash new creativity and that’s exactly what has happened.
“Most of the people we work with [in the agencies] come from a large-agency background and I think they have the ambition to break free from a large organisation to focus on the creative process.”
Martin Smith, a partner in new agency Rapley, Smith & Jones, agrees that these changes in the industry are leading to the creation of a new structure.
He says: “The multinational agencies have got rid of experienced people because of the downturn. Good work at these agencies has been produced by people who are no longer there and are setting up on their own. Agencies have been good at covering up this fact.”
Smith’s agency, set up ten weeks ago, consists of him, his two partners and a PA. The agency works out what clients want to achieve and then creates a team of independent creatives to work on the client’s behalf.
He argues that this approach creates greater flexibility and e creativity. He says: “Agencies use 30-second TV commercials as the basis for a campaign. We have creatives that are suitable for certain styles of campaign, or are good at working across certain media.”
But Smith concedes clients are cautious about changing their strategy. He says Rapley, Smith & Jones already has clients, but won’t name them because it is being used on a low-key level by clients experimenting with the concept.
He explains: “We’re not expecting clients like Unilever to become clients straight away – but there may be brands which they will want to put into other agencies, like us, to get a new approach.”
There are those who are still cautious about moving away from the larger agencies. Mothercare, for example, is looking to put all its direct marketing into an agency away from the in-house team. At the moment it uses a mix of in-house creatives and agencies.
Tony Holdway, Mothercare’s head of communications, is cautious about the new style of relationship being forged. He argues that traditional agencies offer reliability and a coherent strategy. He says: “Call me old fashioned but you really want to work with an agency over time. It’s not about the short term, it’s about three-year plans which large agencies can give you.”
Holdway adds: “Advertising is cheaper in house but you can argue that outside advertising work stimulates better sales.
“Also, in my experience, it is hard to maintain creative ideas over time in house. Agencies will use different teams. I’ve seen work go downhill rapidly because of a lack of ideas.”
But Smith argues that clients are frustrated by the high staff turnover in agencies. He says: “Clients argue there are too many new people who start working on their account. We can offer greater cohesion because each of our creatives has their own profit and loss to worry about, which creates a more business-like approach.”
When work is moved in house it is often to save money or because the creative work created by an outside agency isn’t working. But Holdway argues this is not always the most sensible move and that managers often have to be challenged.
He says: “Pressure comes when agencies don’t deliver. If clients are not happy with their agency the work is automatically questioned.
“One of the issues is ‘Why pay when we can do it in house?’ My challenge is to argue ‘What could an amazing agency do for us?’ That’s often forgotten.”
Not so, says easyGroup director of corporate affairs James Rothnie. EasyGroup, which includes easyCar and easyInternetCafé, uses in-house creatives for all its campaigns and Rothnie says the company’s cheap-and-cheerful approach enables this to happen.
He adds: “Advertising is core to competence, so we wouldn’t consider putting that outside the business. And, because we are dealing in many languages, we have a straightforward approach to advertising which lends itself to in-house creatives.”
He adds that, by its nature, it does not pay for the group to outsource advertising. “Our products don’t need advertising. There is an element of brand building, but if you deliver on service customers come back.”