Social Battle #8: Is there a threat to traditional agencies as brands turn into publishers?

Big brands creating their own media houses is nothing new. It’s something brands like Red Bull have been doing for years. But the scariest part for agencies, is watching others in recent years, follow suit.

Take Coca-Cola for example, or Marriott Hotels, in the past two years both have begun creating their own magazines. Marriott now has two award-winning films under their belt and they are slowly building an unstoppable team to fuel their ‘in-house agency’.

What is the motivation behind multinationals dropping (sometimes) lengthy agency relationships to build their own house team?

Some big shakers in agencies have moved over to ‘brand life’. It’s easy to say the grass is always greener; beyond the investment for these companies, is it going to be easy for them to create the gel and have creatives adapt to corporate life?

This move, if successful, could challenge the whole agency model. What would be the consequences for large agencies built around these sort of clients? What will happen should Apple decide to leave MAL/TBWA or if Ford dropped GTB (formerly Team Detroit)?

These ‘in-house agencies’ go far beyond simply hitting a financial target. Red Bull now has two award-winning, feature length films and even its own TV channel on Apple TV (the first of its kind). It’s an opportunity for brands to create branded content that truly aligns with their philosophy and way of thinking.

Whether or not brands becoming their own agencies will be a genuine threat to traditional agencies is yet to be seen. Is this just another marketing fad that will fade into non-existence or will we see more brands publishing their own content in the future?

“I think that’s what this is all about… trust. Agencies need to work hard to regain the trust of their most important clients”

First of all, if this is ever going to be an issue it will only affect big agencies that can handle clients the size of Apple etc. It’s also a difficult one to gauge because there are only a few very interesting case studies at the moment.

Marriott have gone into this all guns blazing and clearly spent a lot of money building up their team (stealing two head marketers from Warner Bros), and it shows. The content they have produced is fantastic and it goes so much further than simply ‘marketing’ their product. I think in a way they have copied the philosophy of Red Bull, which is to give their target audience content they really want to read / see / listen to, without shouting too much about the actual brand, as it’s already a household name.

However, this risk is one a lot of companies won’t be willing to do. What if it doesn’t work? What if you hire three top level marketers and give them six-figure salaries to realise six months down the line that the agency you were working with were actually doing a better job?

I think in the long run agencies need to prove themselves. On the top level, they need to strive for innovation and creativity, in a way that they should always have been doing. Lower down, they need to be hiring and nurturing the very best talents to help them regain the trust between agency and brand.

And I think that’s what this is all about… trust. Agencies need to work hard to regain the trust of their most important clients (disclaimer: no clients are more or less important than one another, I just mean the ones that spend the most money). And the only way this can be done is by creating a real, lasting relationship with these brands and proving, in an industry now saturated by bad content, that agencies are still leaders – like they should be.

“Red Bull created an ‘in-house’, not only because it would save money, but because of the control and added synergy from the creative process.”

There’s an argument to be made that we are observing a pendulum swing after a long period where companies have been under pressure to globalise and align with shareholder interest. It’s a case where companies have outsourced a lot of high-level functions, leading to a boom of the consulting industry. As companies backtrack, will the advertising industry be severely hit?

Let’s be honest, the advertising industry has not always been up to its own standards in terms of creativity and innovation. Bureaucracy and entrenched habits are quite widespread and that diminishes the return on investment for a client.

So the leap to at least internalise the bureaucracy was logical. The bad news for the industry is that the clients most susceptible to the move are those operating in markets where brand image is crucial; in other words, the most important clients. The risk is real.

There are two possible responses: merging agencies may create economies of scale and allow the industry to compete on price with internalisation. It’s a losing strategy. Red Bull created an ‘in-house’, not only because it would save money, but because of the control and added synergy from the creative process.

So that’s what agencies who choose to adapt to the trend must offer to the clients: control and synergy with the company, but also that added value – a compelling and innovative process. Agencies must rediscover how to bring the client along in the creative process and show them today what their brand could be tomorrow.