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Why are these companies adapting this strategy?
Roell: The early adaptors of this strategy are more visionaries than the most recent ones, who understood that direct client relationships based on strategic approaches are more long-term oriented and provide a hedge against their publisher-specific offerings. Publisher offerings, for example, are very commoditized, and in today's fragmented media, clients have numerous choices. With agency relationships, the client and agency tie goes deeper (still) and provides organizations with a long-term revenue opportunity. At the same time, agencies have the ability to steer clients in certain directions, so publishers are thinking, "Why not steer some of the media plan to our publisher group?" That is the big discussion: the objectivity behind the campaigns.
Hamill: Custom marketing projects are great business for publishers. The process of generating ideas and executing them brings you inevitably closer to your clients and provides a deeper relationship as well as solid funding.
Our strategy is to manage our business with our best advertising customers through customization and partnership marketing. To do that we are in fact operating and structured much like an internal ad agency. Senior advertising directors manage accounts with the support of a full marketing team, a research team and a creative team. A trademarked three-part collaboration process helps us work with our ad partners to maximize the effectiveness of their communications program. We also routinely bring them solution-based ideas that utilize multiple Hearst assets as well as retail promotions, event marketing, primary research and often creative. In 2007 we will do about 30 custom projects for our corporate clients that will increment sales to Hearst Magazines by about $30 million and create over 500 ad pages.
Miller: At the NBC Agency, for instance, we know the company intimately and can gear up very quickly. We also have long-term relationships in our business so it's somewhat like dealing in shorthand.
How much does it save them by not retaining an agency?
Roell: The question is not about saving money, as I have come across companies that are actually charging much more than agencies. The questions for clients include questions about the value proposition or what their needs are when choosing the proper agency relationship. Pricing is only one area to consider. Others should include the level of skills based on the marketer's needs, strategic levels required, technical resources and information, to name a few.
Hamill: I think most advertisers who are utilizing the custom marketing services of media partners still have their own agencies. They are working with the publisher in order to more effectively and efficiently communicate with the consumer. They may have some savings if we do the creative but I don't think that is a driving factor.
Miller: We're saving between $8 and 12 million each year by having our in-house group handle various projects. Many of these tend to be quick and easy projects that you would not do if you had to pay for them.
Do they lose out on creativity by not getting outside, objective opinions: companies, for instance, can become very insular.
Roell: The answer to this question is based on how companies have created their in-house agency. If they have built it from an internal standpoint, meaning it is an extension of what their services are, in our experience, we have found them to be less objective and more tunnel-focused. This may lead to a lack of creativity. However, in the most recent acquisition phase, there was a land-grab for outside agencies to make them part of the environment. In this case, you have a group that was already operating independently as an agency and unless they become too integrated with the publisher side (mostly independent), you would not foresee a loss of creativity.
Hamill: Most of these programs get looked at in the inception phases by lots of eyes. There is a great deal of discussion on creative issues. I don't think there is a creative trade-off.
Miller: It can get insular but on the whole, since we're part of the same corporate culture, we have a better understanding of the network's unique needs and requirements. And since media funnels through the NBC Agency, we get good rates since we can bundle them.