Agency brain & brawn: are brands drinking the in-housing Kool-Aid?

"Every week there are stories of brands retendering, with agencies enthusiastically falling over one another in a race to the bottom on margins. Among the most recent cases, Hilton has set about building its own internal "centers of excellence" dedicated to specific media and marketing areas, which will be reinforced by the right niche and independent agency. One of the unintended consequences of the digital revolution has been to challenge the identity and purpose of the all-encompassing agency."

"While positioning to handle the execution of the campaigns themselves, brands are now looking for more courageous and expert creative from agency partners. But this is a next to impossible task for whoever wins the brief. Rather than being symptomatic of agency capabilities, the barriers to agency success are systematic. However courageous they might be, agencies will always struggle where the 'brain' behind campaigns has historically been the incumbent."

Brands are increasingly retendering work and in-housing capabilities, causing agencies to undercut margins and compete aggressively. Some brands, including Hilton, are building internal centers of excellence focused on specific media and marketing areas and plan to reinforce these with niche independent agencies. The digital revolution has challenged the purpose of all-encompassing agencies, while brands demand more courageous, expert creative. New incumbent agencies face systematic barriers because historical campaign knowledge and insights remain with the previous incumbent and are lost when contracts change. The trend toward taking back control and mastering customer relationships, data, and marketing learnings creates opportunities for agencies to reposition and share responsibility.

Read at The Drum