Agencies are no strangers to disruption. Recent years have unleashed a practically-unending seismic event for the industry, from changing consumers tastes, demographics, and innovative new technologies. The latest wave of change to face agencies continues an established trend: brands pulling more and more marketing functionality in-house.
The tide of insourcing came in yet again when Walmart, a mega-retailer and one of the world’s largest brands, announced last month that it would be bringing ad sales and analytics in-house from WPP’s Triad. Walmart joins brands like Unilever, Verizon, Booking.com, and many others that are insourcing functions like digital, creative, or media buying. In fact, in 2018, the Association of National Advertisers (ANA) reported that 78% of members had some form of in-house agency compared to just 58% five years earlier.
Many brands are moving to insource marketing to exercise tighter control over their advertising and preserve a cohesive brand image, which can be disrupted as brands jump from agency to agency between campaigns. Others are hoping to cut costs, move faster, or move away from a creative and delivery model focused on national print or TV campaigns amid the age of digital.
Another key reason for agency insourcing is improved data collection. When brands control their own marketing, then they control the flow of even more customer data; this can help brands to unify their customer data to unlock powerful insights and reveal potential opportunities to grow or cultivate loyalty. Furthermore, as the General Data Protection Regulation (GDPR) goes into effect in Europe and conversations about data escalate stateside, brands want to ensure they’re protecting sensitive information.
However, the grass isn’t always greener on the in-house side. Before brands can reap the fruits of in-house agencies, there are a number of challenges they must contend with in establishing their own internal operations. Recruitment, for example, can be an enormous stumbling block for brands since the secret to great ideas is great talent, and brands might not be able to attract the best and the brightest as soon as they open in-house agencies. Brands should also take care that their in-house arms don’t clash with any external agency relationships they carry on.
This wave of insourcing isn’t the first disruption agencies have faced, and it won’t be the last. It’s simply the sign of a transformative moment in the industry, and it’ll be exciting to watch how both agencies and brands move forward and press on to new heights.