Agencies might dominate the advertising discussion, but according to a 2008 Association of National Advertisers (ANA) survey, slightly more than one-third of its members (42 percent) said that they have established in-house agencies within their marketing departments. In most cases, those in-house agencies handle some, but not all, of the brand's marketing. But increasingly, it's not unheard of to see brands that do it all in-house.
Historically, writes ANA executive vice president Bill Duggan, many people associated in-house agencies with efficiency and lower costs. But, according to Duggan, it's no longer true that brands are sacrificing creative when they do work in-house.
"Many of us have been schooled on the 'triangle' throughout our careers -- 'fast, cheap, good...pick two,'" Duggan writes. "In-house agencies have always been fast and cheap. But more and more in-house agencies are now challenging the triangle theory by being good as well. Expect to see the use of in-house agencies to grow and become even more important going forward."
According to the brands interviewed for this article, handling their advertising in-house isn't just about balancing the tradeoffs between fast, cheap, and good. To be sure, those factors are always present. But there's also something else that unites brands that do their work in-house. It's a philosophy that puts a premium on substance over style, on digging deep into your brand's data rather than betting big on the latest solution, and on knowing your brand better than anyone else.
Let's take a look at three brands that choose to do it all in-house -- and why.
Pandora streams music and helps fans discover new songs and artists by leveraging its Music Genome Project. At the end of April this year, the company boasted 70.1 million active listeners.
Why not work with an agency?
Up until now, Pandora hasn't needed to hire an agency, says Melissa Waters, director of brand marketing at the company. In part, that's because Pandora began life as a "scrappy startup," which meant doing marketing in-house. But it's more than just tradition that keeps marketing in-house, Waters says. It's really about the brand's culture.
"We're all on the same floor," Waters says. "So we have a lot of hallway and kitchen conversations that help lead to better creative outcomes."
But that creativity isn't limited to Pandora's marketing department. Good ideas can, and do, come from all over the company, says Waters, who cites the company's recent SXSW campaign as an example of how Pandora takes in-house to the next level:
A music festival like SXSW is kind of a no-brainer for a brand like Pandora, which says its mission is to "play only music you'll love." But as any marketer knows, it's a big leap from identifying an opportunity like SXSW to executing on it.
"We have a lot of passion for bringing Pandora to life, so very early on in our brainstorming sessions, we came up with this idea for crafting genre days for SXSW," Waters says.
From there, the idea evolved to street art, which seemed like a natural fit between SXSW's indie vibe and Pandora's music culture. But to take that idea and turn it into something the brand could execute on, Waters says the marketing department coordinated with a wide range of departments within Pandora.
"We had an illustrator who was able to come up with some very cool images that fit the idea, but we also took advantage of our music curators and analysts, who helped us identify words and iconography that were representative of each genre," she says.
The result was a very strong and effective campaign. But it was also an organic campaign because the ideation process came from so many different Pandora employees. In the end, Pandora's SXSW campaign didn't just push the brand's message; it embodied the brand's passion for what it does.
Could that have happened with an agency?
"Sure," Waters says. "But the tough part about working with an agency is that you spend a lot of time bringing them up to speed on your culture."
Working with an agency might also have made Pandora look and feel like the rest of the pack. "An agency might have a lot of great ideas, but their initial instinct might be to bring our marketing in line with the rest of the space, which isn't what we want to do because we're pretty nuanced," Waters says.
So how does Pandora do it and stay on the cutting edge?
Pandora might be somewhat unique as far as brands go. But it has two things going for it. First, technology is a core component of the brand, so staying on the cutting edge of digital isn't just a theoretical exercise for the marketing department; it's an essential part of what every team at the company does.
But Pandora's marketing team has another advantage. On any given day, there are more than 2,000 campaigns running on Pandora. The company's creative services team doesn't work with all of the advertisers on the site, but it does work with a lot of them on a lot of different things, Waters says.
"In a way, they're almost like an agency, so they have to stay very current," Waters explains. "Because we're already doing a lot of cutting-edge work for clients, it's a very cost-effective way for us to stay current with what's new in digital."
Ritani is a high-end jewelry brand. According to its website, the company "marries the online shopping experience and a selection of custom-made diamond engagement rings, loose diamonds, and other fine jewelry with a network of trusted local jewelers in one seamless transaction."
Why not work with an agency?
Ritani isn't the oldest name in jewelry -- not by a long shot. In fact, the brand began life in 1999 with the idea of using the web to change the way people bought their engagement rings. That history is important to the brand's marketing today because, says Kevin Flaherty, VP of marketing at Ritani, "Our approach is that anything core to our long-term success needs to live within the company walls."
For Flaherty, the key to success is all about keeping the in-house skill set sharp, as those skills tend to have a lot of overlap between advertising and other key business functions. "Since digital marketing is fundamental to our success, the core digital skills need to be on our team rather than outsourced to a third party," Flaherty says.
But it's also about learning.
"We're constantly amazed by the subtlety of our business," Flaherty says. "Depending on the time of day, day of the week, time of year, color of the engagement ring band, and a million other things, we generate different kinds of behaviors and conversion rates. Understanding all the various combinations and catering to the most important ones have really determined our success."
While Flaherty believes working with an agency certainly would have yielded "a-ha moments" for the brand, he worries that the lessons learned from all those little teaching moments might have slipped through the cracks if the brand's in-house team were simply spoon-fed conclusions.
"There are a lot of [those moments]," he says. "Individually they don't mean much, but when you add them all together, they make a big difference."
But do you lose something by not working with an agency?
Sure, there are tradeoffs to doing it all in-house.
"The biggest advantage of an agency is their third-party perspective, which, in the best of cases, leads to a lot of cross-pollination of the best ideas they're seeing from all their clients," Flaherty says. "We certainly miss out on that perspective by doing everything in-house. The other tradeoff is that agencies tend to have individuals that smaller companies can never afford, particularly in the creative development areas of marketing."
While access to top talent is an issue for brands that don't work with agencies, Flaherty points out that smaller brands aren't totally shut out from the market. "We try and mitigate those shortfalls by fostering relationships with other non-competitive companies in Seattle for best practice sharing," he says.
But what about the work?
Ritani doesn't use every single digital platform available to it. Instead, the brand focuses on driving traffic to its website, which is where buyers are most likely to activate around a $5,000 average price point. To do that, the brand uses tools like email, Facebook, and, increasingly, Pinterest, which Flaherty says has "a lot of crossover" with the brand's other social channels.
While an email-social-web approach might not seem all that sexy, Flaherty says, "The cutting edge has lots of sizzle, but the day-in, day-out still has most of the meat."
For the most part, that means using social -- Ritani's Facebook page has more than 700,000 followers -- to identify customers and drive email signups. From there, Ritani uses email to bring customers to the website.
For Ritani, strategy is important. But at the end of the day, it still comes down to execution. And by keeping all of the work in-house, Flaherty believes the brand is able to break down silo walls and keep them down.
"The developers who build and send our email and the content folks who write the emails and populate our social media channels can literally lean over and grab one another," Flaherty says. "All these channels have to be super-coordinated in order to work well with the customer. While not impossible, it's really hard to create an agency-client relationship where there is such fluid communication between the two parties."
Seamless is an online food delivery service that works with 12,000-plus restaurants across 40 cities. The company has about 2 million users.
Why not work with an agency?
If you had to sum up the Seamless marketing philosophy, you couldn't do much better than "know your customer." In fact, knowing the customer is such an important part of the Seamless philosophy that Ryan Scott, the company's VP of marketing, says he wants his creative team to be a true stakeholder.
"As a result of understanding the brand and the business metrics, working in-house allows a bond to be created between the creative team and the customer, which ultimately drive profits," Scott says. "Stakeholders from each department work directly with a designer and copywriter to come up with a campaign. This allows the responsibility to be shared and the work to be more effective. It's a simple concept, but with the right workflow and checkpoints along the way, it really creates a nimble, innovative creative development model."
Of course, agencies still have their advantages. Chief among them, Scott says, is the ability to "take an independent view." Naturally, that means there are tradeoffs to working in-house for Seamless. Most notably, Scott says, there is added pressure on the creative team to "evaluate their work objectively before it goes to market."
How does Seamless stay on the cutting edge of digital?
In a word: data. All of the marketing at Seamless is data-driven. But, Scott says, data is only the starting point for a good idea.
"What keeps agencies on the cutting edge is an inherent freedom to try new things," Scott says. "At Seamless, the leadership team has created a similar freedom, specifically by taking deliberate risks that are grounded in data and giving the creative team the direction to always be searching for the latest trends. We believe that responsive, data-driven marketing is mission critical to our success, and by having the creative team focused on the data side of the equation, that makes them uniquely positioned to serve our customers."
So what about the work?
You've probably noticed that cats play well online. Well, so did Seamless. But for its "Moneybags" campaign, Scott says it used data to drive the in-house creative team to create something that would both work with the current internet culture and remain true to the brand's personality.
According to Scott, the creative team focused on two questions:
- What's trending right now?
- What's the most insanely over-the-top version of that trend that would resonate with our customers' needs, desires, and wants?
Those questions let the brand's creative team run free, but before the idea went to market, Seamless switched gears and took a more objective look at the creative.
"Once the 'provocative version' was decided on, we made sure it was scalable and took it down a few notches to ensure we were still communicating our value propositions," Scott says.
Michael Estrin is a freelance writer.
"Strong arms businessman" image via Shutterstock.