Have Traditional Agencies ‘Ad their day?

Advances in technology and lower costs make taking advertising in house a viable alternative to the agency model

The trials and tribulations of big ad agencies are nothing new. As consumers gradually transition from traditional advertising platforms to digital and mobile, ad agencies have struggled to endure an ongoing wave of disruption. According to Shar VanBoskirk, Principle Analyst at Forrester, 86 per cent of marketing investments go towards ads. Alongside repeated claims that agencies are dead in the water, they remain influential. However, in order to stay relevant, the likes of WPP will have to overcome yet another challenge – in house ad teams.

Another nail in the coffin
Last summer, Lucozade Ribena Suntory set up TED – not the forum for interesting talks, but a creative internal team fuelled by tech, entertainment and design. TED currently creates and launches half of UK ads, and now the company is also looking to make the team responsible for display and social media too. This move highlights the willingness of businesses to control of their own ad campaigns and data. Booking.com, Procter & Gamble and Pernod Ricard are just a handful of other companies who have rejected traditional ad agencies in favour of a home grown approach. By selling digital media to its own media buyers, Pernod Ricard saved a tidy $71.5 million in the first half of 2017.

“Market forces are moving in this production space,” says Nicole Yershon, innovation consultant, founder of Ogilvy Labs, entrepreneur and author. “Costs continue to come down and technology continues to move at a pace, with connections being far more easily made. More clients are seeing what can be possible if they do it themselves.”

In many ways it’s easy to see why companies have increasingly adopted in house advertising. Through TED, LRS can experiment with their own marketing and sales data to improve campaigns. This is something they couldn’t do as easily if they used an agency. The main benefit, though, seems to be efficiency. Nicole recalls one instance in which a company put together a TV commercial in just five weeks, without mass resource expenditure – “The client went to the shoot with no endless meetings about script or brief changes or research,” she says. “With a tight agile team of two clients and three agency people, it all got done and dusted within the time period.”

Have big advertising firms ‘ad their day?
No wonder a growing list of businesses have already turned away from traditional ad agencies, favouring a simpler, streamlined approach that saves both time and money. Firstly, disrupting the way that ads are created is likely to have an impact on the content itself. Small, efficient teams will be able to release campaigns that take less time to market, offer more concise analysis, and can be quickly altered to best reach the notoriously difficult 21st century audience. If an ad fails to make an impact, it can be recalled and recreated without the need for endless meetings with outside contributors. Although developing internal campaigns may contradict the increase of collaborative partnerships, it’s also a way to protect IP. The key question, though, is whether this trend represents a fatal blow for giant companies like WPP, Omnicom, and Publicis. In short, not yet. Lucozade Ribena Suntory may be allocating more marketing work to TED, but has openly stated that the role of big ad firms within the company will continue. Ad agencies have been forced to continually adapt to change, and up until now they have ridden out the storm.

Advertising is constantly evolving, but not to the extent that advertising companies won’t continue to play an important part. This may mean taking on the role of consultants rather than creators, providing advice instead of content. Businesses have experimented with in house marketing and design for years, and yet the incumbent ad industry trundles on. However, companies appear to be taking internal marketing far more seriously, with ambitious brands like LRS and Pernod Ricard setting glowing examples. Soon, ad agencies will have to turn their efforts to advertising themselves.