IN HOUSE OR OUT HOUSE?

In-housing, cost-cutting and the commodification of creativity

May 21, 2020

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I kicked a hornet’s nest. I blame it on P&G’s Global CMO Marc Pritchard. I’ve long been a fan, he’s a big thinker. Pritchard was one of the earliest marketers to embrace the power of purpose. In my books, marketing pearls typically drop from his mouth.

  

Karen Howe is Founder/The Township Group and Cannes Advisory Board Member


But this year he broke my heart. At a session in Cannes, he revealed himself to be a lusty and vocal fan of in-housing. In-housing!? This beacon of global creativity? For those unfamiliar with the term, “in-housing” is a euphemism  for “the client takes their creative in-house”.

In-housing is having a moment after years of a lull.  The number of companies choosing to in-house has almost doubled in the last ten years. So it’s kind of like whack-a-mole. 

My gut reaction was disbelief. I posted a chippy comment about in-housing being the bastion of the B League, a harbour for those whose who really didn’t give a shit about great creative. It was a triumph of budget over big ideas. You get the idea. It was a bit of tirade. The blowback was fierce. There are many frustrated clients out there.

The number one reason clients cut their agency is money. With tremendous pressure to deliver results for shareholders, many marketers feel their budget is better served bringing creative in-house. Some feel agencies have become too layered (read: expensive), and they are not providing sufficient value (again read: expensive). The cost of production is one issue according to James Bliss, Vice President Marketing + Communications at University Health Foundation. He feels it strains the corporate purse strings. Others lament that agencies care only about winning awards, not business results.

Agencies wanting to do award-winning work for their clients are doing what is exactly right for business. Studies by McKinsey have demonstrated repeatedly that the kind of creative that wins awards also drives business. 

In-housing can also come from a more positive place. Clients such as ATB Financial’s SVP of Brand Carol Shymgol value the encoded brand DNA, the tight internal relationships it builds. She feels everyone is mutually aligned on goals and vision and are fully invested in future success, and that they respect the power of creative.

Other marketers have embraced but fine-tuned the in-housing model. Disney has addressed the common concern about the quality of creative by tapping Canada’s much-awarded Helen Pak to run Disney’s internal agency Yellow Shoes. 

But sadly, for the majority, it’s strictly about the bottom line. For them the quality of creative is the acceptable sacrificial lamb. I am not even sure they’re aware of the compromise they are making. We’ve all seen it done wrong so many times. 

What about external agency partners? Agencies wanting to do award-winning work for their clients are doing what is exactly right for business. Studies by McKinsey have demonstrated repeatedly that the kind of creative that wins awards also drives business. 

That’s because remarkable creative smacks itself onto our collective radar screens. As someone who has judged every major award show, I know that stellar ideas are unforgettable. They shoulder their way past the tech-toggling ADD culture we now live in and rise above the clatter of the 5000 or more messages that bombard us daily. Competition is fierce, so we need good work now more than ever.

One of our greatest values as an agency is we aren’t you. Because in-housing done wrong can, at times, be myopic. It’s the same people, day-in-day out, sharing the same corporate world view. Our job as an agency is to challenge and question that. We bring fresh eyes to the table and represent the consumer’s voice. We share your pain, objectives and goals, but we sit outside your circle. Sometimes contrarian but often the balance needed to provide clarity in decision-making. 

We offer cross-pollination by sharing priceless learning from other categories because we so often work across many sectors. Agencies are typically deeply multi-media literate, bringing the critical bench strength to TV, digital, radio and OOH. We are immersed in craft of execution. And when clients build long-term relationships with us, we too speak their brand shorthand. So if not in-housing, what?

Consider sharing candid feedback with your agency. Work with a consultant to get back on track. In some cases, agencies need to pick up their game. In some cases, clients do. Often it’s a little of both. Failing that, you may need a new agency more aligned to your needs. 

Perhaps the perfect answer may lay in compromise; straddle both worlds. Have an ad agency for the heavy lifting, the big strategic thinking, the long-term projects that require fierce objectivity and deep creative expertise from conception to flawless execution. But flank it with in-housing for more of the day-to-day needs.

Let’s not all give up on the agency model. Not yet. It still has a vitally strategic role to play. Let’s just make it better.

This story originally appeared in Applied Arts magazine. To subscribe, for just $29.99 a year, click here.

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