With Brands Going in-house, Should Agencies be Worried?

Here is the big question- should brands outsource their brand-building work to different agencies or do they need to have in-house capabilities?

During 1970-80s, the marketing strategies of a brand revolved around the traditional set of media- TV, Radio, Newspapers, etc. The greater privilege of outsourcing work was enjoyed by a hand full of big brands, whereas small brands carried their work in-house.

With newer avenues opening since 90s, marketers felt the need to experiment and find smarter ways to tackle the competition. This led to addressing the growing gambit of marketing techniques (videos, mobile advertising, performance marketing, etc). As a natural consequence, the control of marketers started eroding because various agencies started coming up with novel ideas. There was a need for greater integration that was being felt because the targeting opportunities increased.

With less relevant talent in-house, brands started relying on agency support. However, with increasing horizons (in terms of marketing opportunities), COST came into play. It became nearly impossible for brands to go all out and hire an agency for each and every work. This further led to partial or complete reliance on in-house teams.

This was the time for marketers to think of the changing paradigm- whether to go in-house or outsource work.

The whole brand building landscape has witnessed an exponential change in the past years. My push to write this article has been influenced by the on-going debates on the importance of agencies and if reliance on in-house capabilities is the only option. I have tried delving into all perspectives by talking with some of the prominent marketers, agency heads, and service providers, where they make some valid and plausible points to defend their turf.

Here’s talking about the larger picture of both sides.

Benefits of Keeping Brand Building In-house

1. Cultural Connect

Your company’s culture, missions, and values are the most valuable assets that you hold and no one better than an in-house team can wrap them in your work. An internal team will reflect more passion for fulfilling the company’s mission, which on the other hand, is hard to expect from an external agency.

Many online brands like Myntra are classic examples of having an in-house arm for high-speed turnarounds.

2. Better Understanding

It is natural that an in-house team will have an in-depth understanding of your brand in terms of its history, products and services. Their tracking will be far extensive, inter-teams communication will be better and monitoring will be regular since it will be immersed in the company’s activities throughout the day.

Prasun Kumar, CMO at Magicbricks comments here saying, “Working in-house ensures speed, agility, and sense of business impact. It can potentially give better control on the process and saving of time that goes into iterations as the same can be done on real-time basis.

An in-house team for sure will be far more cost effective as a lot of cost overruns could be avoided. It may also ensure a better understanding of business and its requirements at the brief development stage. This appreciation & understanding saves a lot of practical time & energy. A lot of online brands today, for example, have in-house teams driving website / App designs and experiences. There’s a possibility there also to outsource, but keeping few core development inside is better. However, an agency could be a different ball game altogether.”

3. Dedicated Team

With an internal creative team, their 100% of the time will be devoted to one single task. On the other hand, external teams work on multiple clients at the same time. This results in the internal team giving in their maximum effort to get that one task done, instead of juggling with multiple projects at the same time. Also, most of the grunt work which requires quick turnaround time is generally pulled in-house to also have greater control over it.

On asking if the agencies today should be worried about their survival and if in-house is the new norm, Anita Nayyar, CEO India and South-East Asia of Havas Media Group says, “I think agencies should be worried for they will lose the high ground and the communication & creative expertise through which they build brands and help their business through conversion.”

Kumar believes that agencies get tied up in the cobweb of what the client wants and as a natural consequence, continue doing the regular. He says, “Logically agencies should bring in fresh perspectives and ideas but over a period of time, they all tend to get boxed/trapped carrying the baggage of association and the attitude of ‘The client wants/likes these types of ideas / creative only, so why waste time.’

Benefits of Outsourcing Work

1. Novel ideas and perspectives

One of the biggest downsides of an internal team is that most ideas are framed on the same lines and begin to stagnate after a point in time. It becomes hard to infuse freshness to the brand.

Such a scenario might also lead to the creative work being done within the company bubble, without paying heed to what the industry is doing at large. This may also be true because the internal leadership team wields a heavy hand and doesn’t let the creative team take risks and try new things.  

Working with an agency means fresh outside-in perspectives, access to varied & quality talent and unadulterated ideas. This also helps in removing any internal biases that might otherwise creep into the work. Getting an external agency onboard can bring a good sense of what has ‘been done’ and present new and exciting on the plate.

Agnello Dias, Chairman & Co-founder of TapRoot India here says, “Agencies can be more agile and dependable because they have access to a wider pool of talent than an in-house agency. Also, agencies have very agile thinkers who are exposed to the wider world outside and can use their experiences across a wider set of brands to address issues. An in-house agency will never have that kind of exposure.”

Yashaswini Samat, Chairman & MD of Grey Group India, also supports the idea of hiring an agency, for it brings in freshness to the brand. She says. “In my opinion, pulling all communication development in-house is not a good idea. The value an agency brings with fresh ideas and best outside-in thinking will be lost to our brands if all creative development is brought in house. There is a reason many companies that played with in-housing creatives stopped doing that.

2. Inheritance of their experience

While initially, an agency might not have a full understanding of your business, it will get hold of it with time. However, it brings along a depth of experience which is unquestionable.

A well-positioned agency is generally focused on one or two specific industries or practices. This is where you can take advantage of the experience of a seasoned team of branding professionals. It is like quick access to part-time help from senior creative people, instead of onboarding a completely new team in your office and paying them premium salaries.

On this occasion, Saumitra Prasad, CMO at Kokuyo Camlin Ltd. says, “Advertising agencies are re-orienting themselves to the new climate and should not go out of business. After all, it’s a very important and specialist function for the brand.” 

Commenting on the same lines, Srikanth Bureddy, Co-Founder & Director at Valueleaf Services (India) Pvt. Ltd. says, “The intelligent abilities (creative/ technological/ digital) in an organization are always helpful to the agencies because a lot of practices are carried out by the brand. So, an agency knows what can be done in the market rather than having unlimited or crude expectations. They know this is the time an experiment will take and this much is the time we need to wait. Hence, fair to choose agencies.”

Nayyar also adds, “Brands should be worried for they may not have the expertise to be able to do justice in connecting with the consumer impacting their business.”

3. Budget Flexibility

One benefit of outsourcing work helps you have more flexibility for managing your budget. In case the budget needs to be cut down temporarily, an internal team faces the repercussions the quickest. This may lead to a very difficult situation where employees end up losing their jobs and the complete morale of the company is impacted.

With an agency, it is easy to scale an engagement up or down. You can keep altering your plans as per the need of the hour. So, tweaking the cost dynamics is a big plus here.

Dias also adds, “As far as I know, majority of the in housework is in the area of Below-the-Line and collateral material that requires extremely fast turnarounds on extremely tight budgets. Mainstream ATL advertising going in house is still rare given the paucity of high-end talent. So except for the erosion of one peripheral revenue stream, agencies should not be too worried about this.”

Benefits of a blended approach

While there is no concrete answer to which way is more recommended, for both hold equal importance in their own respect, there is always an option for companies to not default themselves to one of the extremes. You can always choose to have a blended approach that yields the benefits of working with an agency and having a full-time internal creative team.

Since brands generally work on one campaign at a time, investing for a team throughout the year can be avoided by collaborating with an agency. On the agency side, it is easy for them to switch to other clients when one brand’s campaign is completed. In fact, there are agencies that are quite happy dealing with internal creative teams of a brand. The collaboration is generally effective and works well for the brand.

Even on a financial front, a blended approach allows you to take advantage of the economies of having lower-cost, full-time internal creative help while also gaining the flexibility to expand or reduce expenditures with an agency quickly as necessary.

Speaking on the topic, Rachna Anbumani, VP Marketing at Lavazza says, “Make or buy is a classic conundrum faced by most enterprises. There can never be one right model. When the scale of production is very high, it makes sense to do work in-house.
However, since third-party agencies have a detached view and work in multiple sectors, they may bring fresh and creative thought more effectively.

Kumar shares his views on the concept of a blended approach, He say, “Lot of brands today do have in-house resources as well, alongside an agency on board. However, these in-house resources are primarily for non-campaign jobs though can aid in creative iterations, etc. at the campaign development stage. However, to have both in-house and external agency driving brand campaigns may not work as the duplicity does not necessarily mean better quality & quantity of output.”

My Take

In my view, there are multiple factors that define a business’ strategy. They all differ in nature, type and other related factors. However, I feel a brand must not keep all its eggs in one basket and divide work amongst in-house and outsourcing both. This will help them yield the benefits of both, giving the right efficiency. Just make sure that all teams are on the same page and well synced.

Of course, the final call depends on your business type and budget, I hope this article helped you clear the cloud surrounding both sides and determine the best approach for you.