Procter & Gamble’s in-house agency has taken over a larger share of its media business in the US as the world’s biggest advertiser ups efforts to streamline its agency roster and marketing spend.
According to AdWeek the FMCG giant carried out an internal bid process, rather than a more traditional pitch, that saw current media agencies Hearts & Science and Carat compete with its in-house team. That process resulted in P&G’s in-house team winning two bids – one of which was media buying for its quite sizeable oral care business.
This isn’t the first time P&G has used an in-house team. The company recently launched a similar in-house team called Woven to handle media planning for its fabric care lineup.
Woven’s creation was significant as fabric care is P&G’s biggest business in North America. That move was met with much interest, particularly around whether P&G could make a success of in-housing media.
Arguably, this latest news shows it was. P&G is clearly happy to hand over more business to internal teams although the company says it still “sees an important role for agencies”. However, it is giving people working on its brands the chance to do more “operational work” including media planning and buying.
“We are constantly working to optimise our media buy, and we will work closely with our media agencies on how that work is done,” a spokesperson tells AdWeek. “We clearly see an important role for the agencies.”
They add: “We can confirm we are in partnership with our agencies as we explore a new media model for fiscal year 2019-2020 that ensures our brands are in best control of their levers for growth while maintaining the significant scale advantage P&G currently sees.”
P&G’s commitment to streamlining
This decision might be significant but is by no means a surprise. P&G’s chief brand officer Marc Pritchard has repeatedly argued that the company needs to cut both costs and the distance between its marketers and the consumers they’re serving.
Almost a year ago, he called for an end to the “archaic mad men model”, complaining that marketers had been “steadily outsourcing work to agencies”. At the same time he questioned why P&G brand managers shouldn’t be doing more work themselves, whether coming up with creative ideas or buying media.
He explained: “We need P&G people much closer to the consumers they serve and we need fewer project managers and more brand entrepreneurs. This means renewed partnerships to work with agencies, not through them. We’ll pay for what creates value for consumers, and discern what work should be done by P&G people versus agency people.”
He added: “If entrepreneurs can buy digital media, why can’t the brand team on Tide, Dawn and Crest be entrepreneurs and do the same? They can, and they will,”
Is this the future?
Is this increasing blend of in-house and agency partnership the future of media? P&G seems to think as it looks to give its brands more autonomy.
And it is not alone. Nearly 80% of the brands that are members of the US Association of National Advertisers (ANA) have some form of in-house agency, according to research last year. This is a sharp increase from the 58% of marketers who took some form of advertising in-house in 2013 and 42% in 2008.
Yet there are pitfalls to brands trying to do too much themselves. Take Vodafone, which last year said it planned to create its own media teams in the UK, Germany, Italy, Spain and India, giving the business direct responsibility for buying media including search, social and programmatic. Yet just three months later it backtracked in programmatic, citing difficulties with getting the right teams in place and internal tensions over who owned the setup.
There is also the argument that taking too much in-house can create tunnel vision and that buying media is too far from most brand’s core competencies. Speaking at the ProcureCon conference last year, Direct Line marketing director Mark Evans said he learnt the importance of agencies as “genuine strategic partnerships” while training as a graduate at Mars.
If there is someone that can do a job better than you then let them do that job
Mark Evans, Direct Line
He explained: “If there is someone that can do a job better than you then let them do that job and help you in that process.For us [at Direct Line] we have done some in-housing but only where it was so obvious to do it that we would happily potentially forego the downside.
“The downside is that as soon as you in-house something, there is a snapshotting that happens. You take an influx of really good talent and they take all their accumulated knowledge and wisdom into the business at that time and they immediately potentially put the shutters up because they only know about insurance and there is less of an imperative to be in tune with the developing world outside. In most cases we have done part in-housing, so we still get the freshness and vitality and external perspective, but we have some of the core skills embedded within.”
That blended model is increasingly being adopted, whether in media buying, content or social media. Zopa’s chief customer officer Clare Gambardella believes brands can get too “hung up” on in-house versus agency. “It is more about having the optimal mix of skills without too much down time,” she says.
In-housing media can look like an attractive option on paper; in theory cutting out the middle man (agencies) should save time and money and bring brands closer to the consumer. When it’s done well it proves to be a great opportunity for marketers to get more accountability and transparency.
However, many brands do not have the capabilities to make this work and P&G is still in the early stages of what this might look like and how it might work. Other brands will be watching with interest to see how it pans out longer team before trying it themselves.