The rise of the in-house agency

New Delhi: Trends have a way of reinventing themselves and returning with a big bang.

The common belief in fashion is that trends may get recycled roughly every 20 years because that is approximately the size of the generation gap, and it takes at least that long for a new generation to come of age and re-discover a style that was popular when they were young.

What is true of fashion may now also be true of the ad agency business. After all, Lintas was an acronym for Lever International Advertising Services and was the in-house agency of Unilever. It was first established in 1899 and existed for the better part of the 20^th century as an in-house agency until it became a part of various merged entities like SSCB and Lintas and Ammirati Puris Lintas. 

Being a staunch JWT man all of my life ( I hate the name VML! ), we took it as part of our destiny that Lintas would have a major share of the Unilever business given its in-house history.  Our task was to continuously assail that position along with Ogilvy and take little bites of their business.  I remember a time when more than 50% of the Unilever business went to Lintas.

The return of the in-house agency

The return of the in-house agency is something I should have predicted the day Unilever made it mandatory that they wanted an exclusive team at the agency to handle their business.  While the exclusive team made the client deliriously happy, we at the agency were cautious about the move. Partly because we felt that if the exclusive team at the agency worked only on Unilever, they would be blinkered and only learn to think like Unilever about advertising.  This we felt would breed incomplete advertising people in the agency.  We were also worried that our people would get bored and finally leave the agency.

But the trend of the in-house agency is back!   Or maybe the in-house agency is no longer a trend. The ANA report of 2023 says that 82% of their members have an in-house agency but maybe this is of varying capabilities, I imagine. 

The same report says that when asked, ‘What KPIs do you use to assess the effectiveness of your in-house agency’, the importance of business performance rose dramatically (from 45% in 2018 to 59% in 2023) and is now ranked second and only slightly behind cost savings of 62% in 2023, down from 69%).”

My guess is that while creative services might be something clients might want to have in-house, the final frontier is media and this would continue to elude them, although in-house agencies may dabble in some media.  Because the power of media is quantity, it might be difficult to compete with the rates offered by the media conglomerates.

Tunnel vision

One of the great detractors of setting up an in-house agency is that their employees could easily develop tunnel vision. This was our fear at JWT when Unilever first asked us to set up an exclusive team at the agency for them. In fact, most of our best employees refused to be part of the team.  So, in effect, maybe we were fielding our B team for the exclusive Unilever team. This is because the in-house advertising team is very focused on the company’s business and brands and they are not exposed to ideas outside the company. Also, they can often find themselves behind on advertising and marketing trends.  This may result in making your advertising stiff or worse still make it stale.

Another problem could be skill gaps.  You may not be able to hire people to fill all the skills you need.  This might be the reason why the ANA report also says that 92% also work with external agencies. This might well be because the in-house agency falls short in some areas of expertise.

Some examples of in-house agencies include: Content Factory by Coca-Cola, BBC Creative by BBC, and Yellow Tag Productions by Best Buy. Closer home, Godrej Consumer Products launched its Lighthouse Creative Lab with Swati Bhattacharya as its global head. It is only a year old and I guess the industry is watching the move with interest.

With all the pressure on the erstwhile advertising industry with the major threat of digital taking over, the in-house agency is one more threat to advertising as we know it. 

But I am hoping that it is yet too early to write the epitaph that advertising is dead.  Maybe it has morphed into another avatar. Maybe advertising as we knew it is certainly dying! 

Hallelujah!