Originally posted on Forbes, written by Adit Abhyankar on December 3, 2020
In what could be seen as the coup de grace to the traditional agency model, Adweek recently crowned Oliver the fastest-growing large agency in North America, with a reported growth of a whopping 380%. What is unique about Oliver is that unlike traditional agencies, it builds in-house capabilities, and it does it for major brands such as Adidas, Bayer and Unilever. Oliver’s rapid growth seems to be symptomatic of a general shift to insourcing creative production that’s been gathering momentum in recent years.
Gartner’s 2020 CMO spend survey revealed that 32% of those brands surveyed had brought work in-house. What's interesting is the breadth of scope; the in-housed work ranged from social marketing, creative production, AV production, creative concepting and PR to traditional and programmatic media.
This migration of work can be put down to three factors, all of which have been accelerated by the current pandemic.
The first is obviously margin pressure. Although brands have been affected differently by the change in market conditions, all have had to allocate resources to new activities, which has put downward pressure on margins. The hunt for savings is on, and no department is immune.
The next is the voracious appetite of digital media for assets. This is perfectly illustrated by PepsiCo CMO Brad Jakeman, who said at the 2017 Cannes Lions Festival, “Instead of five pieces of content a year, a brand like Pepsi needs about 5,000 pieces of content a year. Instead of taking six months to develop an ad, we have six hours or six days. And instead of it costing $2 million, it needs to cost $20,000.”
Since then, we’ve only seen further proliferation of media channels requiring even more assets (hello, TikTok). This growing tsunami of assets simply cannot be efficiently produced by human-powered production services. This is not just due to cost, but it’s also the legacy processes of these services that inhibit the speed and flexibility required to produce and distribute that volume of assets.
And finally, there is the promise of personalized media. As brands discover the benefits of personalized media, and especially personalization that is delivered through dynamically changing creative (ad campaigns that adapt to the users' interaction mid-flight), the need for multiple variations outstrips not just what can be provided by external production agencies, but indeed what can realistically be delivered by humans.
The challenge for in-house agencies is that simply bringing all the production inside the brand's tent does not necessarily meet the needs of these three driving factors. It is quite possible to build an internal production facility that is still expensive, inefficient and inflexible, not to mention less competent! While shifting the location of the cost to an internal P&L is helpful in terms of visibility, it’s not a silver bullet, and there are still a number of barriers to overcome.
The first key inefficiency is the separation of creative and media, an unnatural division that was a result of the late 1980s and early '90s consolidation across the advertising industrial complex. The separation continues to plague us today, impacting both the effectiveness of the creative work and the efficiency of delivering it to media outlets. By using software, in-house agencies can deliver media insights to inform creative (in real time, if that’s useful) and to traffic the multitude of assets to the media outlets. Trafficking 10-day SLAs, as an example, can be executed in minutes, dramatically increasing speed and ability to optimize creative for campaigns in-flight.
The next inefficiency is, ironically, the proliferation of software. The divisions between media and creative on the organizational side has also created division and ever-increasing specialization on the software side. The famous Lumascape illustrates this clearly. The net result is far too much complexity, and the need for specialized knowledge but also a major challenge in getting all the systems to work with each other, which is even harder as cookies disappear.
As a result of this complexity and lack of interoperability, it seems that we’re looking for love in all the wrong places. Too much time is spent on data and plumbing that does not truly build differentiation instead of really focusing on content and messaging that engages consumers with our brands.
To address these needs and fulfill the promise of in-housing, what is needed is a new class of software that is interoperable, uses the existing infrastructure and available APIs and provides clarity of process, not another layer of process.
David Jones, CEO of "brandtech" investor You & Mr Jones, alluded to this in a comment during a recent episode on the Campaign podcast: "There is an interesting analogy in what Salesforce have built as a business. Sales was very similar to where marketing is today. Everybody had their own thing — there wasn't really any process or technology around it. And you've seen Salesforce build a $150 billion valuation SaaS model business using technology to help people organize their sales process.”
The challenge is that we still operate with legacy technology designed to operate and even facilitate silos. If we’re going to attain the nirvana of truly personalized marketing, we’re going to need to find a new path, one that helps users organize their processes.
With processes organized, the real power of in-housing can be realized as a layer of software and people who is permissioned to freely push intelligence and data into and out of the enterprise to test, learn and continually improve how businesses can make their content more relevant and engaging. Focusing on activities that truly add competitive differentiation and letting tools do the rest allows for scale. Activating first-party data via platforms they already use, making the most of what they already have reduces complexity and friction.
By focusing on efficiency, brands can unlock the huge untapped power of digital creative and content to drive growth.
Global enterprise markets who use the Google marketing stack now have an easy way to scale creative in multiple markets.
Too often, the knee-jerk measure of success is solely uplift. Ad-Lib.io's Adit Abhyankar asks, what are you really proving with your proof of concept?