In house vs agency – symbiosis or conflict?
As an agency guy, you know my answer is going to be skewed. You know I’m always going to say agencies are key and you can’t do this stuff in house. Well, the honest truth is, you can. So many companies have already done this – remember where Ikon came from? Anyone care to guess? If you said CommBank you would be right. Once upon a time CommBank had its own media business called 360. It later stripped it out and called it Ikon 360 and later it became fully independent and renamed itself Ikon Communications. True story!
So you see, the idea of in-house vs agency has been going on for a long time.
Fundamentally, when a marketing function becomes so central to the business success, it needs to find a home internally. One example is the recent trend in the growth of in-house UX (user experience) teams. Many banks and heavy digitally-reliant businesses are fast growing their internal technology and experience teams. Why? The answer is simple. Much of these tasks are not set and forget, and thus require a team to consistently monitor and tweak. The function of creating and running these teams is really the internal challenge organisations face. As these teams are new it’s hard to simply integrate them into the traditional (if not archaic) organisational structure. This is one reason most organisations outsource to agencies – it just gets too hard.
I think over time agencies and clients somehow forgot about their roles within the relationship. In the good old days clients did what they did best, make great products, and agencies acted as their internal marketing teams. However, as time moved on and the marketing function started to move in house, the lines started to blur around who’s role was for what. The confusion created what we have today, a group of people who call themselves agencies who are really nothing more than a production function.
I have heard many agency bosses say to me directly, ‘You give away the strategy to get the production work. That’s how we make our money, you should do the same’. Seriously! That’s what has happened. Look at your agency. They have one senior planner and a bunch of twenty something planners, and a heap of creative production people. Why? The reason is simple. Clients have taken much of the thinking in house. So what’s left? Production.
The issue is that the lines were never agreed, and agencies have lost more and more control as clients have taken the core functions in house. Why do you think agencies are having a hard time surviving? What else do you think happens when you become a production based organisation – you become a victim of the margin squeeze.
Sorry, I got a little carried away. Back to agency versus in house. Look, the facts are simple. Agencies are the test bed of what is the next big thing that needs to go in house. Agencies invent it, test it, refine it and clients take it in house. So where does that leave us? The answer is simple. Agencies are the base for the new, new thing – why do you think everyone is looking for a social media specialist? Why do you think all these agencies have social media gurus. (PS: how do you become a guru when the practice of social media has only really been around for five years?)
The new evolving relationship between clients and agencies is slowly starting to define itself. Clients will always outsource the new, new thing. They will always look for someone to challenge what they have; they will always look for the refresh. However, they will always bring the core in house. A simple analogue is like dating and marriage. You date the bad boy (agencies) and you marry the good boy (the core services). Everyone loves the bad guy with the cool ideas and wiz-bang integrated doohickeys. But no one likes this stuff everyday all day. You need your consistency – you need to know the day-to-day stuff will always get done.
So fundamentally, clients need agencies to help create and define the future, find the new way and engage the new audience. The only question that no one is willing to ask is, ‘How do we work together (client and agency) to transition between what agencies create to what clients need to take in house?’
Ideally, agencies have a responsibility to help clients stabilise themselves for the future. Don’t worry, agency folk, we will always have a place. We are responsible for helping define tomorrow. We are the thought leaders. As long as there are clients, there will always be a need for agencies that can help guide the future.