In-housing VS agency partnerships: Marketers and agency heads battle it out

The debate between in-housing versus agencies is an ongoing one even today. While some companies prefer tapping on agencies’ expertise for fresh ideas and insights, some value speed and cost that in-house teams bring. In November last year, Gucci’s parent company Kering mulled bringing several functions in-house, one of them being its eCommerce function. Meanwhile, Revlon parted ways with Grey in 2018 after forming its in-house agency The Red House. While these changes are occurring on a global scale, the lines between in-house and agency is blurred for some local industry players.

During a debate session at A+M’s Digital Marketing Asia Malaysia 2019 conference, moderated by Maxis'  head of brand and partnerships, Tai Kam Leong, McDonald’s Malaysia’s marketing director Eugene Lee said it is about having a balance instead of pitting both camps against each other. According to him, McDonald’s engages agencies when it does not have the technical expertise required internally.

“If you’re asking for a professional opinion and your company does not have it internally, it’s best to ask it from outside, whether it’s from an agency or a consulting firm,” Lee said.

McDonald’s currently works with Leo Burnett for creative executions and according to Lee, in order to combine both the agency expertise and speed, McDonald’s sets aside a meeting room for them to “camp” in the office. Doing so allows the company to make changes on the spot. As for expertise, Lee also explained that if a company's core business is selling burgers and fries, it will be tough to hire a media agency executive internally who will receive as much an exposure or training as someone in the core media agency scene, for example. This is because McDonald’s will not be able to offer that individual the right training or exposure as compared to the agency agency.

In terms of media planning and buying, Lee said, “Media strategy for us comes from the agency but the buying can be done in-house. I can hire an army of people, for example, to stare at the computer screen and buy. But if you ask me to come up with the media strategy and give the team guidance on how to buy it, McDonald’s probably won’t be able to do that as well as media agencies."

Although the “biggest benefits” of having an in-house team are cost, control and speed, Lee said the downside to that would be having “inflated” teams that lack efficiency, and sometimes cross industry experience.

“We are a very marketing focused company. We know how to market and sell [our products] but there are so many branches under that. If I were to bring in people to manage every single aspect such as SEO or digital buying on Facebook, I would have a rather huge team. The marketing team would be so inflated that it wouldn’t be efficient anymore,” he explained.

Lee also identified a gap in the type of talent needed for in-house teams. According to him, when individuals are brought into an in-house team, they are almost always expected to “level up” in terms of their capabilities. For example, when a designer is hired, the marketing team expects she or he to function as a creative director. As such, there remains talent gap in the type of capabilities required for in-house teams.

Likewise, this is where agencies can come in and fill that gap. Currently, McDonald’s not only has an in-house team to manage CRM, but is also working with a CRM agency, with each providing internal and external perspectives respectively when analysing data. “That’s where we find the equilibrium. My CRM person is able to share insights using a McDonald’s lens while the agency comes in with an agency lens,” Lee added.

On the other hand, Lok Weng Lum, Shopee’s head of online marketing, campaigns and CRM, said that while agencies can be fast, this only holds true for certain markets. For competitive and fast-moving markets, and in his field, in-house teams still triumph agencies in terms of speed.

The guy sitting next to you lives and breathes the brand and its problems. So for sure, this person will be way faster as compared to an agency.

Another area that in-house teams have an edge over agencies is knowing the business inside out. Data is extremely important for an eCommerce platform such as Shopee. While an agency can offer to help analyse the data, for example, Lok said that it would not be able to understand the broader context behind it and contextualise the data.

“It is very hard for an agency to contextualise some of the data because data is just numbers. The agency does not understand what the data is at that particular point in time. Sometimes, the downfall of such situations, especially if you don’t have a very close partner, is that these can just be snapshot remarks as compared to an overall view,” Lok explained.

Agencies as strategic consultants

The agency scene has also come full circle. Previously, agencies used to function as an integrated offering where clients would go to them for all their needs. Then, it evolved into becoming specialists in their own areas such as media, PR and digital. Now, clients have gone back to looking for an integrated offering from agencies.

Darren Yuen, Reprise Digital’s group managing director said agencies need to constantly evolve against the market needs. Previously, for media agencies in particular, clients always relied on them to execute media buys and that’s a surefire way for media agencies to earn money. Today, Yuen said clients engage with agencies on a retainer basis for strategic purposes and less for media execution or buying.

“As such, we need to look at how we can drive efficiency in the ecosystem that the clients already have and how the agency business has evolved to bring benefit to the marketing space,” Yuen said.

Meanwhile, Neeraj Gulati, partner at Entropia said rather than debate about in-house teams versus agencies, the conversation should move towards becoming one about professional services. “There is a huge difference between execution and marketing. Marketing is not execution. Are we expecting the solution to come from an expert? If yes, then I’ll bring [the service] up the value chain a bit,” he said

Gulati explained that it is important for brands to understand their core business. The core business of an agency relates to creative problem solving and for agencies to truly survive today is to be able to understand the challenge that their clients face and being able to answer it.

“In my mind, that ability to zoom out and see things from a distance, and be able to put my knowledge of working with various clients to good use among my own client base is absolutely irreplaceable. For majority of businesses, they don’t have the luxury to zoom out and look at the big picture. Maybe the solutions needed are quite basic but it’s the ability of looking at it [from a different perspective] from where you sit,” he said.

When it comes to Entropia’s core business, Gulati said the team sees themselves as providers of marketing solutions, even as the industry constantly evolves and the agency has to adapt to the changes. “The emphasis of going into unknown territories, whether it is data, consumer experiences or technology products, for us it’s much easier because our commitment to these areas are much lower,” he said.

Gulati explained that in order for some companies to get in on the data or consumer experience trend, they might have to invest a huge amount of money to overhaul their legacy systems, for example. Whereas for agencies, it is “very easy because our real product is people”, he said.