Why procurement teams aren’t clamouring for brands to in-house
Perceived wisdom might suggest procurement would be keen to in-house more creative and media, but many are concerned about the impact this could have on the quality of work and level of talent working on it.
By Sarah Vizard
Brands are increasingly in-housing both creative and media as they look to take more control of their spend. For example in media, while just 1% of marketers have an in-house media team at the moment and only 4% use a hybrid model, this is expected to rise to 10% and 50% in the coming years, according to Infectious Media.
The perceived wisdom is that in-housing can help cut costs by taking a layer out of the system, as well as ensure marketers have a better understanding and more control of their processes. But some disagree.
Direct Line Group has in-housed some aspects of its marketing, mostly around digital including paid social, PPC and marketing effectiveness. However, marketing director Mark Evans is against full in-housing, because he believes brands “need a thread to the outside world”.
“We have done some in-housing, but only where it was so obvious to do it that we would happily forego the potential downside,” he said, speaking at the ProcureCon Marketing conference last week.
“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.”
It’s about talent and getting that creative freshness, and I’m not sure if you have the in-house model you will be able to keep that.
Damian Ellis, Mondelēz International
Mondelēz International is also not pursuing in-house, with its director of global procurement Damian Ellis saying that if anything the company “has gone in the opposite direction”. Instead, Mondelēz is exploring the “middle ground” of ‘in-office’, so having its agency partners working from the same office as its internal teams.
“For us it’s about talent and getting that creative freshness, and I’m not sure if you have the in-house model you will be able to keep that,” he added.
Evans’s views on in-housing were shaped when he worked at Mars. Its mantra was that companies should only do what they do best, and for most brands that isn’t creative work and media buying.
With that frame of mind, brands can then strike relationships with agencies that are “genuine strategic partnerships”. “If there is someone that can do a job better than you then let them do that job and help you in that process,” he said.
READ MORE: How to break down the barriers between marketing and procurement
BT has dabbled with in-housing, first around copywriting and then around design and build. But the company’s general manager of marketing procurement Paula O’Reilly says it is mainly focused around “low risk stuff” such as basic website updates.
“The marketing team is the orchestra and we want to make sure we are still in control of the key decisions that need to be made. So we are only comfortable for very tactical, basic stuff to go in-house so you don’t lose the benefit of that external knowledge,” she said.
While LVMH, the company behind brands including Dior, Louis Vuitton and Moët & Chandon does have most of its creative team in-house, its head of marketing procurement Valérie Revol believes the company is in a unique position to attract creative talent because of its size and the prestige of its brand.
She cautions, however, that smaller brands could struggle to attract and retain talent. “For small brands, it could lower the creative,” she warns.
Fantastic to see this balanced view come into play with all sides appreciating the need for eyes out there that aren’t the brand to bring something fresh and new to the table. There is no doubt we need to address some of the ways agencies and brands co-exist (Keith Weed article last week highlights this, Diageo’s agency contract article today) but let’s think about the skills we need and some of the skills lost in the fight for margins, agencies stripping everything back to keep the cost model going (in the words of Tony Spong ‘all the late 20/early 30 somethings have gone travelling’) to re-evaluate not just how we deliver but why – this will start to address the agency model and adjust for future. We have an incredible industry, growing it’s world leading status and attracting incredible talent to deliver all this amazing work. Whether it’s in house or traditional, let’s get some good old fashioned sanity back in the game guys and keep delivering the diverse mix that makes up our industry.
If you undervalue your in-house creative by limiting their stretch and only allowing them the ‘low-risk stuff’, is it any surprise you’ll get low-risk creative in return? As an in-house designer myself, all too often have I seen the pattern of firms building an in-house team to save on agency costs, and then balking at what it actually takes to attract and retain good creative. In-house marketers want to stay as creatively fresh as much as any agency, but if companies limit their scope, stifle development and view them as little more than a glorified support function, of course quality and reach will suffer. A strong in-house team can be the most passionate, knowledgeable and dedicated advocates for their brand – but if all they get is the donkey work while agencies are offered the best projects, what do you expect to happen? If your current in-house team is creatively stale, you’ve either beaten them down already or hired the wrong people.