REI, the outdoor goods retailer, launched its Opt Outside campaign back in 2015 with the announcement that all of its stores were going to close on Black Friday. For the third year in a row, instead of joining in the annual shopping extravaganza, it has given its 12,000 employees a paid holiday, encouraging them to enjoy the outdoors.
Opt Outside is arguably one of the strongest creative ideas of the decade, very successfully executed. The surprise to some is that it was entirely created in-house.
This trend of moving creative in-house is increasingly on the rise and here to stay.
However, I’m not going to add to the noise about the demise of the agency.
Having worked at some of the top agencies in the UK for the large part of my career, I am acutely aware of the inflection point agencies are experiencing. It requires a rethink in how they service their clients and what they offer them.
But this is not the end.
Lucozade, Pepsi, Unilever, P&G, L’Oréal, BMW, Pernod Ricard, lastminute.com, Booking.com and Safestore. They’re all household names and have, in recent years, moved significant internal resources out of agencies to fund their own in-house content production processes.
Unilever, for example, plans to double efficiency savings from its brand and marketing investment from €1bn to €2bn by 2019 according to a Unilever shareholder report from April 2017. The number of ads it creates will also be cut by 30% and the number of creative agencies it works with globally will be halved (from 3,000).
P&G has also cut its agency roster by 50% over the past three years and made a pledge to make significantly less but better performing advertising and marketing campaigns.
Self-storage company Safestore has a primary company target for 2017 to bring everything in house. All content campaigns, outreach and PR are currently carried out in-house and it is looking to produce more video content internally.
Lucozade brought its creative and production services in-house after launching its own agency, TED, in April 2016. Not the amazing and inspiring conference platform of the same name.
The creation of Lucozade’s TED was also a move to “reduce fixed costs”, as well as to create faster, more efficient work that worked harder.
According to Jon Evans, the marketing and business development director for Lucozade Ribena Suntory, launching a fitness app in house meant the brand could cut down significantly on development times and eliminate the need for handovers of knowledge and process.
‘By having an in-house agency, we’ve reduced fixed costs compared to costs that go on consumer activity. That’s been the main driver,’ Evans told Marketing Week. ‘We spend £50m a year on advertising and promotion, and we haven’t changed that level of investment. We’ve just made that investment work much better.’
Let’s take a look at the other side of the fence too though. Lucozade is still engaged with ‘two or three strategic agencies’ whose role is more to provide longer term thinking and ‘a global perspective on market activity’ rather than day to day activity.
That is to say, agencies still have a seat at the table, but the cushion has changed and the seat looks different. ‘External agencies give us the best creative talent and strategy, and then TED gives us the ability to go and execute it,’ says Evans.
This is telling.
Brands are now becoming the makers.
Agencies are still doing the thinking, but brands are doing increasingly more of the, well, doing. The benefits to this approach is not only in time efficiencies but also cost. A further illustration of this: it was reported that a recent sampling campaign for Lucozade Energy was funded entirely through the savings made by bringing work in house. Now that’s getting more bang for your buck.
The shifting (communications) sands
Brands as makers is arguably one of the biggest changes in the brand and agency dynamic in recent history.
But. And there’s always a but isn’t there? The recent Pepsi campaign that was subsequently and very quickly pulled shows that creativity in absolute isolation with no other filters can be a recipe for brand disaster. It was widely commented that the ad spot tried to appropriate the 'Black Lives Matter' movement for commercial gain when instead Pepsi was "trying to project a global message of unity, peace and understanding".
A key takeaway from the debacle is that outside, independent perspectives are vital to help marketers avoid creating echo chambers.
The best outcome would be that agencies, as a result of these in-house moves, would be able to focus more attention on what they do best: the creative ideation and strategy. And brands would use their increased in-house firepower to execute quicker and move more efficiently. This is a compromise that makes a lot of sense for both parties.
Regardless of the death knell stories about agencies, which are often one-sided views, I don’t buy into the argument that the agency is dead or dying. But it is evolving (see Karmarama and myriad others for an idea of where *some* agencies’ futures are heading.)
I believe that, in the long term, the realigning of both parties’ core strengths is a good thing for both brand and agency. The reason this has all come about is a rampant drive for greater efficiency and ROI. This much is not new news, but after an increasing number of brands have put their money where their mouth is, it is starting to prove effective.
Agencies are under far more intense scrutiny and measurement of effectiveness than ever before. The endless data points that are at our collective fingertips have sent traditional thinking and processes into a tailspin. No longer is a gut feel creative idea enough to get through ‘the system’.
This has forced the ideas business (creative agencies) to work out their very reason for being, and what they will need to do in order to exist in years to come.
Maybe 2017 is the year brands and agencies finally agree on the best way to work together, and can take this forwards to 2018.