Which brands are suitable for the in-house model that saves P&G 10% of media costs?

This article deeply explores the application of the in-house marketing model in large brands such as P&G and the cost-effectiveness it brings, analyzes whether this model is suitable for all brands, and its advantages and challenges, and proposes the relationship between enterprise scale and the adaptation of the in-house model, how to innovatively combine the working methods of internal teams and agencies, etc. Recommended for professionals who are interested in marketing strategy, brand management and enterprise cost optimization.

The news that "the in-house model saves P&G 10% of media costs" spread in China, sparking heated discussions in the marketing industry.

Regarding this marketing method that has only become popular in the digital marketing era, in the comment section of the article "P&G says: In-house model saves P&G 10% of media costs" published by Morketing, some are optimistic, some are opposed, and some are skeptical about companies adopting the in-house model.

But ultimately, is in-house a way of working that is suitable for all brands?

One brand told Morketing that it was reducing its in-house team and preparing to transform its business. In the future, it will use the in-house team to do things that "external agencies can't do or don't have standard business segments."

Obviously, the in-house model is like a piece of plasticine, showing completely different marketing values ​​from the perspectives of brands of different sizes and with different advertising needs. Therefore, many brands are wavering between continuing to adopt the in-house model and returning to agencies, while some brands have already firmly adjusted the work content of the in-house model in an attempt to find a better solution.

1. What exactly is in-house?

First, let’s clarify the definition of in-house marketing - the brand establishes a marketing team within the company to be responsible for external marketing activities, including advertising creativity, advertising production, advertising placement, social media communication, etc.

About ten years ago, as the digital marketing era continued to advance, the "in-house fever" among global brand owners reached its peak.

In 2015, Procter & Gamble drastically cut advertising agencies, established an in-house creative team, and established an independent advertising company in 2018; in 2016, Apple established an in-house team; in 2017, McDonald's established an in-house team; in 2018, Anheuser-Busch InBev established an in-house team...

This model is chosen because in-house can bring multiple benefits to brands, such as the in-house team is more familiar with the brand and industry, has a faster response speed, is focused on serving the brand, is easier to manage, etc. More importantly, the brand takes back the "dialogue right" with consumers, can better track data and ROI, and thus measure marketing results and adjust the next stage of marketing goals.

Seven years ago, Unilever Chief Financial Officer Graeme Pitkethly said that his company's in-house team U-Studio helped save about 30% of marketing costs in 2017.

But at the same time, the disadvantages of in-house teams are also obvious, such as increasing the difficulty of recruiting talent, increasing employee costs, increasing the cost of related software, and having to bear the negative impact of employee turnover , etc.

For example, in 2017, PepsiCo’s in-house team, the Creators Alliance, planned an advertising video that was accused of disrespecting black human rights activities because of its inappropriate content protesting against unfair treatment of black people. This brought the brand a negative reputation for a long time, and netizens made their own pictures to mock PepsiCo’s ad. In 2018, the two founders of the Creators Alliance also announced their resignations.

2. In-house is a double-edged sword and is not suitable for all companies

Looking back now, brands’ attitudes towards in-house advertising had already diverged significantly around 2018. A study by Forrester and the In-house Agency Forum showed that “the number of advertisers with in-house agency teams has increased from 42% a decade ago to 64%.” P&G also announced that year that it would further cut external agencies and bring more advertising business in-house.

Despite this, in the same year, Intel laid off its in-house team, which had been established only three years ago. The industry generally believes that the main reason Intel gave up in-house was "resources" - agencies often have huge amounts of media resources, but this is what brands lack, which will lead to low efficiency of the in-house team.

Moreover, compared with mature marketing agencies, in-house employees are limited in the marketing links they can participate in, and have relatively fewer career options. Although the giants have a loud name, they cannot provide marketers with a broad career development path and learning opportunities, which makes recruitment difficult, and naturally endangers the work output and long-term development of the in-house team. Not to mention, for well-known mature brands, if the in-house team is not professional enough, it may even damage the brand image.

So what types of brands can benefit more from the in-house model?

Morketing summarized some suggestions from brand and marketing experts. If we draw a diagram of the relationship between enterprise size and the in-house model, it might be a parabola:

For many smaller companies, it is very necessary for the team to produce content ideas and promote marketing internally, because only they know the business best and facing the market and hearing consumer feedback at this stage play a very important role in their continued development and optimization of marketing work; for medium-sized companies with a certain number of customers and hoping to continue to expand in the short term, agencies can help them with "logistics support" and help them speed up and improve efficiency faster; for To C consumer giants with larger businesses, the media purchases are huge and they hope to firmly grasp the first-party data. At this time, in-house becomes a media form that must be tried.

In addition to the size of the enterprise, specific marketing needs are also a decisive factor.

The in-house model of P&G and Unilever can help companies reduce costs and increase efficiency. The underlying reason is that their purchase volume is huge, which gives them more bargaining power with the media, and ultimately helps companies save money. In addition, at the content level, if companies have more flexible and diverse requirements for content creativity, such as the need to keep up with current events and quickly produce creative ideas, in this case, an in-house team that is more familiar with the brand business is more suitable.

If the in-house team can help the brand achieve one of the above two effects at the business level, it can be said that it has made up for some of the inherent shortcomings of the agency.

3. Brand owners are creating new in-house models

In 2022, a report in The Drum wrote, "More than a third of CMOs said that bringing marketing, advertising and communications functions within the company is a complete 'operational nightmare.' This is too difficult to implement for non-agency organizations." Some people believe that the in-house model will lead to operational problems, while others believe that internal teams lack inspiration. In short, the in-house model is becoming more and more popular, and more problems are exposed.

Indeed, creativity is a yardstick for the outside world to look at brand marketing cases. In the case of being more familiar with the business of the company, the in-house model will inevitably be closed-door in the long run and face the exhaustion of creative inspiration.

“ Lack of flexibility may not allow our employees to perform at their best. For me, the right answer is to mix the way agencies work with the way brands work to find the optimal solution. ” A brand CMO put forward a new point of view.

FastCompany observed that there are currently two more popular models: in-house model and hybrid in-house model . The former is to establish the entire digital marketing function within the brand, so as to achieve complete control over the data, be able to change strategies at any time and ensure that the data complies with privacy regulations. In the latter, key data is owned and retained by the brand. The brand usually has AdTech accounts, media accounts and data storage solutions, but also has a small team responsible for supervising the activities of the agency and clearly defining their output. FastCompany recommends that the latter is more suitable for companies with relatively small digital marketing teams and lack of digital resources and expertise.

In addition to the two most common in-house models mentioned above, the marketer of a certain brand we mentioned at the beginning told Morketing that they are still working hard to explore and let the in-house team do things that external agencies cannot do. After all, "external agencies do not understand our complex business ecosystem."

IV. Conclusion

Last May, ANA (Association of American Advertisers) data showed that " 82% of corporate members said they now have in-house teams, compared to 78% in 2018. "

The adoption rate of the in-house model among global enterprises is still rising. In the era of content supremacy, whether it is full responsibility or cooperation with agents, in-house is a marketing model that enterprises need to try sooner or later. In the future, we may see in-house being better embedded in the organizational and business frameworks of enterprises in more diverse and innovative ways.

Author: Morketing; Editor: Claire; WeChat public account: Morketing (ID: 1083455)