Why the embedded agency model might be all of our futures

Going in-house is the enemy of creativity - so says conventional agency wisdom. Without stimulating variety, "healthy tension" and an outsider perspective you risk stagnating or worse “going native".

So the idea of a dedicated or an embedded agency has always seemed like a worst-of-all-worlds situation where agency people go to give up; and clients’ cost-savings quickly count for nothing without a compelling creative product to show for it.

So why did I move myself, a wife and two kids from New York (where I was North American Head of Strategy for The&Partnership and working on a variety of clients from telcos to museums, media brands and not-for-profits) back to London last summer to join Pulse Creative, the in-house agency at News UK?

Not because of some farsighted understanding of the dynamics that would deliver Donald Trump to The White House.

And not because I lack ambition.

I did it because I think that the embedded agency might just represent the future of our business. And I’m not the only one. Of course, the concept of embedded agency is not a new one with the in-house teams at Specsavers and Channel 4 very well established. But the trend has gathered momentum over recent years with Apple and Facebook building up their in-house capabilities, Oliver’s continued growth, the creation of We Are Unlimited by Omnicom for McDonalds and The&Partnership’s &Toyota for Toyota. It’s a fair bet that more of these "new model agencies" will follow this year.

Why?

As with basically everything these days, all roads lead back to globalization and digitization. You know the drill… globalization and the internet have fomented wave-upon-wave of disruptors who’ve probably eaten your lunch. And even if you’re lucky enough not to have been directly disrupted, you will have experienced the fall-out as these new entrants raise consumer expectations to levels previously considered preposterous; forcing businesses to work harder and faster for less margin. And the pressure will ratchet up over the next year as currency hedges expire and Brexit bites, demanding that businesses decide whether to pass spiraling costs onto consumers or make cuts elsewhere.

These convulsions have created particular challenges for these businesses’ marketing departments (aka our clients). An abundance of data and the emergence of new channels and platforms have created compelling opportunities for brands to reach and connect with audiences. But this revolution has also brought about a huge amount of complexity.

Somehow, our clients must master and manage an ever-growing array of channels and disciplines (or in lieu of this pay for and coordinate an ever-proliferating roster of agencies). The sheer number of plates that they must keep spinning means the potential to undo all their hard work with an ill-conceived Instagram caption or an event or promotional offer that doesn’t quite get the brand’s tone is ever-more likely. And because everything is happening at the speed of the internet; where disgruntled tweeters or well-primed bots can cause havoc in the blink of an eye, they have to move much faster than is comfortable.

If the client need is to create more assets across a greater number of channels and platforms, at greater speed and for less money, you begin to worry about the ability of conventional agencies with their silos, legacy structures, cumbersome processes and expensive over-heads to provide the solution. And many clients appear to agree. Unilever has pulled marketing support for many of its second tier brands because supporting agency rosters for them is no longer cost-effective, while we see a significant shift to brands taking tasks previously the preserve of the AOR in-house (according to the Association of National Advertisers, nearly 60 per cent of clients used in-house capabilities for part of their advertising or media needs in 2013, up from 42 per cent in 2008).

But in many ways, taking work in house is self-defeating, creating further complexity of new people and new skillsets to manage. By contrast, I believe that the embedded-agency model offers an ideal middle way.

Proximity delivers both speed and quality

To state the obvious, being in the same building as the client facilitates more facetime, allowing for more efficient briefing, co-working, feedback and approvals which dramatically speeds things up. But proximity also fosters quality. The agency benefits from a better understanding of the business born of a wealth of “corridor conversations” and being invited to meetings that a conventional external agency would never be in. In an environment where we must move ever-faster, this insight enables the agency to get things right first time much more often.

Dedication and integration delivers true brand guardianship

Agencies have always regarded themselves as “brand guardians”, but the truth is that our brand guardianship is usually pretty narrow in scope - we get to be the guardians of brand or acquisition comms. And as consumer touchpoints proliferate, this claim holds less water. Yet, precisely because of media fragmentation, there is an ever-greater need for a strategic and creative guardian to oversee the way the brand shows up in the world. Bringing together all disciplines to work together unified by a single bottom line and freed of the demands of additional client engagements, dedicated agency people are able to ‘go deep’, offering true brand-guardianship across all touchpoints to create a consistent, integrated experience.

Removal of over-head delivers real savings

Finally, let’s not ignore the bottom line. With a dedicated, embedded agency, clients only pay for the people and resources they use – not the agency’s VR experiments or the barman with the banter. And of course, they don’t need to pay to keep the lights on in a nice office in Soho or Shoreditch. This adds up to real savings.

Pulse may be the the best iteration of an embedded agency: I’m lucky to work for great brands in a fascinating category in a beautiful office (in London) – there will definitely be less attractive gigs out there. But given the changing dynamics and economics of our industry, expect these gigs to become the norm.

Image Credit : upyourservice