How In-House Teams and Agencies Can Find a Commonality and Work Together

They have to disregard the fear of fees and commitment

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Advertising agencies all around the world are worried—and rightly so. More and more brands are growing in-house teams to better address their own fast-evolving creative needs. This expanding gap between clients and partners reveals a sometimes ugly truth: The ad industry is not quite what it used to be.

It’s been a good decade since agencies were asked to stop focusing on one client and their few respective channels and instead start dealing with a multitude of different clients, each with their own specific needs and expectations and their own preferred channels of communication. Agencies, which have always been resistant to change, now find themselves vacillating between an old-style workflow and an increasing need for higher, faster throughputs.

The fallout was inevitable, and right now, agencies and brands are in many cases painfully out of sync with one another. The brand teams claim their agencies do not fully grasp their needs and cannot keep up with the pace of changes ushered in by the digital era. As a result, many clients have examined in-house capabilities as a way to supplement or even replace their agency partners.

To play contrarian for a moment, what if this isn’t such a bad thing? What if clients with stronger internal teams could help agencies deliver better work? After all, isn’t it an agency’s job to apply a consumer perspective to a brand’s marketing objectives?

Such relationships resemble a neatly choreographed tango, with two partners covering for one another’s weaknesses and accentuating their respective strengths. Ideally, the pair can maintain a balance that leads to captivating and, more importantly, effective work.

Agencies, which have always been resistant to change, now find themselves vacillating between an old-style workflow and an increasing need for higher, faster throughputs.

Ad agencies have years of experience in ideating and crafting campaigns to spread a company’s message and drive its business forward. What they lack is in-depth experience regarding a specific brand and its surrounding ecosystem.

Brand teams, on the other hand, often suffer from “the island effect” wherein they lose touch with everything that does not directly touch their vertical—and this is where agencies come in. “Agencies can foster talent in a way that is not possible on client-side, because they get to work on different clients, industries and with a diversity of talent,” said Rogier Vijverberg, executive director and co-founder of SuperHeroes. In fact, clients facing ever-greater pressure to add value to their brands can use agencies to expand their own horizons.

So if agencies and in-house teams could benefit from working closer together, why do so many see one party as an existential threat to the other?

The answer is simple: fees and commitment. To succeed while working hand-in-hand with clients, agencies will have to change their underlying business models.

While the agency standard of billable hours or FTEs makes sense from an accounting perspective, many clients feel this approach does not facilitate a true commitment to servicing their needs and objectives. Some on the agency side have, in turn, advocated for an end to hourly billing and a shift toward a project-based approach.

Some may disagree with or even fear this pivot. But doesn’t the basic premise of our industry hold that agencies are not merely consultants, but brand architects? Architects, by the way, don’t bill for hours—they bill for projects.

Some agencies have already embraced this brave new world, and some have taken it even further by actively tying their own compensation to specific outcomes. Agencies should, at this point, be confident enough in their own value to expect to be paid based on the quality and success of their work. As Nancy Hill, former CEO and president of the 4As, once put it on Adlandia, “We do ourselves a disservice when we do not value enough what we do to be confident about it.”

In the not-so-distant future, successful agencies will have to accept losing retainers and AOR contracts. Instead, they will have no choice but to move away from day-to-day account management tasks and focus on what really brings value to the clients. If they can do that successfully, then there won’t be any need to feel threatened by in-house teams.