Why are brands taking agencies in-house?

With Coty acquiring social content agency Beamly as it gears up to buy beauty brands from P&G, agencies must keep up with client demands in order to survive.

A group of architects fine-tuning their design on a laptop at the office

According to Coty’s executive VP category development Camillo Pane, the acquisition of Beamly will help the company develop its brand strategies in future and allow for immediate feedback. This will be of particular importance when Coty gains 43 of P&G’s beauty brands, a deal which is planned to go through in the second of half 2016.

“When it comes to combining all of our current and new brands, we will need to engage with our consumers in a very different way from a content creation point of view. This will take some time to change in-house, so it will be good to have Beamly to step change this,” Pane told Marketing Week.

The acquisition of Beamly is part of a wider strategy that will allow Coty to increase the amount of content it can share, thereby taking on more fast-paced content producers like beauty and fashion bloggers.

“By having its finger on the content button, Coty can wrestle back control from fashion bloggers like Zoella. The Beamly move will essentially reduce time around decision making,” says Oystercatchers’ managing partner Richard Robinson.

With many brands believing they are closer to the customer than their external agencies, obtaining in-house talent can take their insight to the next level, according to Debbie Morrison, director of consultancy and best practice at ISBA.

She explains: “It’s a quick way to bring in proven expertise, especially in the content creation area. With an in-house social content agency they are now in a position to deliver insight based content too”.

Others will follow suit

Research by digital society SoDa says Coty’s decision to take talent in-house is part of a wider trend.

The percentage of brands taking their digital efforts in-house grew significantly in 2015, with 27% of brands now claiming to work with no agencies for their digital marketing, more than double the figure from the same study in 2014.

Brands are also cutting back their digital agency rosters. Just 12% of brands had four or more digital agencies this year, down from 21% in 2014.

According to Morrison, many advertisers are looking at different models and ways of handling their marketing in a complex multi-channel, digital environment that demands a more real-time way of operating.

For example, Jaguar created a joint venture with agency Spark 44 to manage its global communications, while Unilever has created The Foundry to incubate new talent and innovations.

“I am certain we will see other clients experimenting with different models going forward. There are no ‘givens’ anymore in this marketplace.”

– Debbie Morrison, director of consultancy and best practice at ISBA

Agencies need to acknowledge the importance of time and speed. Research by ISBA among brand owners indicates an unrest with the current agency status quo. Their agencies have been too slow to respond to the fast pace digital environment, where greater agility is required.

“They feel their current agencies are behind the curve and struggling in the main with legacy structures. The knee jerk position is DIY,” Morrison explains.

Agencies must adapt or die

However, taking talent in-house can be dangerous for agencies and brands alike, should the latter not allow agencies to keep their creative independence.

“In the wrong hands, the in-house creative agency will become nothing more than a foghorn for their brands. No customer wants to hear that – they want to be delighted and engaged,” Oystercatchers’ Robinson claims.

Ultimately, clients and agencies need to find the most appropriate model that works for them.

“Working for an agency, I see this development as further evidence to analyse whether we have the right model and see if the skillset we have is the best one to have,” Robinson adds.

Within the industry, there has been a lot of agency repositioning. For example, Leo Burnett announced this week a merging of their digital and activation agencies so they have one integrated, more agile offering, while Havas have brought their agency offerings together into the Havas Village concept.

“Things are changing and will continue to evolve. There is no such thing as a static model now, so agencies must keep on evolving or die,” Morrison concludes.

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Comments
  • Julia Collis 2 Nov 2015 at 12:38 pm

    Leonie Roderick certainly provides a provocative argument for rethinking the status quo. Whilst the article does give a brief a nod to this solution potentially dulling the creative freedom that agencies usually provide, if they are taken in-house to work with only the one paymaster, there is potential to stymie the brains that thrive because of miscellany. It should be noted that some of our creative stimuli comes from the multiplicity of brands and channels we work in.
    One of our other USPs is that being masters of so many campaigns for so many diverse clients does in itself drive creativity and stimulus. So whilst I completely agree with shaking up the creative landscape, being ‘plural’ has its benefits, not least in being Jill of all trades and mistress of none!

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