WHY CLIENTS GO SOLO: In the current economic downturn, are agencies an expensive luxury?

By LUCY AITKEN, campaignlive.co.uk, Friday, 06 December 2002 12:00AM

Or are they essential to help steer their clients through the bad times? Lucy Aitken investigates.

Ever think about life without advertising agencies? Some clients do. In fact, some clients don't just think about life without ad agencies, they base their entire communications strategy on the idea, eschewing the traditional agency route for an advertising approach that is more solo than Soho.

For many clients the idea of wresting back creative control, of letting go the agency prop (with all its creative, planning and consumer expertise) would be a daunting prospect. But some clients manage it perfectly, and have a long list of reasons why it's a sensible option for them.

Take easyGroup, which incorporates the new-business ventures of the Greek entrepreneur Stelios Haji-Ioannou, and includes easyCar, easyValue and easy.

com. A true maverick in many areas of its operations, easyGroup has never used an ad agency. James Rothnie, the director of corporate affairs at easyGroup, says: "The cost of ad agencies is huge. And if we need to rely on someone to help us sell our product, we are in big trouble." The other factor, he says, is turnaround.

"We can turn an idea around quickly and produce copy for a newspaper in as little as four hours."

The ever-more relevant question of cost figures highly in such debates.

Why pay for all those Levi's-clad creative types to go to the pub to "get their head round the brief"?

For some clients, the traditional advertising agency infrastructure and bureaucracy is an unfathomable and costly beast. And if the likes of Prada and Gucci can produce stunning ads without the assistance of an ad agency, why should other advertisers feel the need to use one? Why not do what Chanel does and have one creative director who is responsible for all the company's creative output? Or take the route well-trodden by a few media owners that have set up their own in-house units to service their creative needs?

Even so, replicating the resource and experience of an ad agency is a formidable task. How do clients such as easyGroup manage? "Myself, Stelios, our in-house media buyer, other relevant executives and whoever else happens to be in the room will sit around a Mac with a designer, design the creative on screen and then send it off," Rothnie says. With creating an ad sounding as straightforward as making a cup of tea, you could almost put money on Stelios' next venture being an agency called easyAdvertising: no-frills advertising, just so long as you want heavily templated ads with white writing on an orange background.

But the flip side is, arguably, creative treatments that are unoriginal and invisible - no matter how effective they may be. One particularly high-profile current example is an ad for the HBOS-owned online insurance brand, esure. Having parted company with Delaney Lund Knox Warren, esure took matters into its own hands. Directed by Michael Winner, and starring Michael Winner, the ad landed squarely in Campaign's Turkey of the Week slot.

But the time agencies often take to produce their beautifully crafted work is a key reason some clients decide to go solo. As Bob Wootton, the director of media and advertising affairs at ISBA, admits: "When it comes to tactical work, the client company might be better at a fast turnaround."

And Martin Jones, the managing director of the AAR, is all too aware of turnaround issues. "Media owners always complain that they can produce a 36-page newspaper in a day while it seems to take an agency three weeks to get their one-page creative treatment right. But with the right technology driving it, this is improving. Agencies know they have to get faster."

But it's not all about quick-fire, low-cost work. Many fashion, perfume and luxury marques don't use agencies and Jones puts it down to the fact that they already have the right contacts and a set idea of how their brand should be communicated: "They know the photographers, models, studios and settings. With fashion brands, it's pure image, there's little brand differentiation, plus they like to think they're one step ahead."

Nigel Long, the chief executive of Partners BBDH, recalls his experience with a luxury-goods brand: "We were working with a global advertiser that had been advertising in-house. We came up with a different point of view and seemed to be making great strides. But in the end they stuck with their 'winning formula' because there was a lack of trust. If you've managed to be successful internally, it's going to take a big leap of faith to think you can get results from working with an ad agency."

It's a conundrum easyJet is now considering. Just as when Virgin launched it had Richard Branson as the face of the brand you could trust, easyJet had Stelios offering good old-fashioned value. But as the enterprise has grown and Stelios is no longer the front man in the group or its advertising, things may changing. Long, whose agency won the account for the rival low-cost airline bmi baby earlier this year, believes it's high time they tried a new trick.

"As a general rule, if you have the market to yourself, advertising in-house is a relevant way to go. But easyJet no longer has the price advantage because other low-cost airlines have appeared on the scene. They need help from outside to develop a more enduring brand proposition," he says.

And Alistair Buckle, the head of marketing at easyJet, is more than aware of how the low-cost airline's advertising needs might change. He says: "Since easyJet acquired Go, we are not a medium-sized player anymore so we will have a clearer idea in the New Year whether we need to review our in-house arrangement."

What the in-house issue really comes down to is that old chestnut of whether advertising is an investment or a cost. Jones puts it down to experience. "The majority of clients that use ad agencies view it as an investment, while those who don't, see it as a cost. You get what you pay for and the people who use agencies can see what they bring to the party."

Hamish Pringle, the director-general of the IPA, agrees: "History and experience show that there's a special set of skills to this business.

There isn't the diversity and the interest within one company to keep the very best creative talent engaged." Pringle cites examples such as the idea for per-second billing for Orange, which, he says, originated from Orange's first agency, WCRS.

But at a time when budgets are tight, advertising can quickly start to look like a cost. So some agencies will be working ten times as hard on all aspects of the advertising process in order to dissuade their clients from uttering those dreaded words: "We have decided to take it in-house."

4CREATIVE

4creative launched as a separate entity from Channel 4 in January 2001 and in its first year of operating, made a profit of £2.1 million. It is now aiming for 40 per cent growth year on year.

Before going independent, 4creative was Channel 4's in-house creative services unit, the centre for Channel 4's advertising ideas, on-air promotions and responsible for sponsorship idents for the likes of Stella Artois/Film Four.

Its first pitch was for attheraces which it won, beating Bates. Since then, it has worked with Vallance Carruthers Coleman Priest on this summer's Big Brother sponsorship, turning around 87 credits. It worked with Michaelides & Bednash on Channel 4 cricket Indian Summer, for which it won Media Campaign of the Year at the Campaign Media Awards. It's also worked with Starcom Motive on extending the Stella proposition to include film screenings and other events.

Lisa Green, the head of 4creative, says: "There is a natural link with us and the likes of Michaelides & Bednash and Drum PHD. We're not there to take on huge agencies. Big agencies look after big clients and we couldn't do that. For instance, we can't buy and sell media space because of Independent Television Commission regulations. Instead, we work on creative projects that run alongside big campaigns."

But the natural extension of its independence was to seek creative tasks for clients beyond its Channel 4 parent. In August, 4creative beat off competition from Malcolm Moore Deakin Hutson and Saatchi & Saatchi Design to win the account for VH1's 100 Greatest Women.

Despite its relative youth, 4creative is working with some big advertisers.

It produced a print brochure this year with NPower, the sponsor of Channel 4's home improvement shows. The branding was minimal and provided editorial value through advice and tips.

4creative still undertakes 30-40 per cent of Channel 4's work, but it doesn't automatically get assigned it: it has to pitch alongside other agencies.

BENETTON

The most famous and controversial of all the in-house ad campaigns, Benetton built its business on a communications strategy that many agencies would never have endorsed.

Benetton's creative chief, Oliviero Toscani, started working for Benetton in the early 80s and his controversial approach to advertising and, in particular, his worldwide campaign about capital punishment, kept Benetton very much in the public eye for the rest of the decade. Toscani focused on issues such as Aids, war and discrimination.

Using advertising to highlight global issues is a vital ingredient of the Benetton brand, according to Federico Sartor, a spokesperson at the Benetton Group. "Luciano Benetton (the company's founder) thought that ads should spring from the heart of the company and believed that you cannot delegate ads. Communication is to say who you are, and who is better placed to do this than people who work for the company?"

So has the fashion brand ever contemplated working with an agency? "Agencies often approach us, but for Benetton, there is no other way to work except with people in the company."

Today, the company doesn't employ a creative director. Instead it has Fabrica, an in-house unit that creates its advertising and manages media buying (with the exception of outdoor, which is organised through a specialist).

Fabrica is a 40-strong team, managed by Benetton's head of advertising, Paolo Landi. So what kind of attitudes do Landi and Fabrica bring to Benetton's advertising now?

"We haven't changed our approach to our advertising," Sartor says. "We are still looking to reflect real life in our communication. We are not interested in advertising where everything is perfect and beautiful. Our models come from the streets, so the idea of beauty is normal beauty.

We don't use famous models or famous faces. But creatively speaking, times have changed. What was controversial ten or 15 years ago is not controversial now. We once used an image of a black woman feeding a white baby and that was a culture shock ten years ago." So while the approach might have changed, Benetton is as committed to its in-house solution as ever.

CRK ADVERTISING

CRK Advertising is the in-house advertising agency for all Calvin Klein-branded products.

CRK Advertising believes in the importance of controlling all aspects of Calvin Klein's image. As the agency sees it, that encompasses everything from stationery and business cards to print and television advertising campaigns.

The in-house agency is part of the brand. It works only on Calvin Klein, with the idea being that its creative people have an intrinsic and natural respect for, and understanding of, the brand and its image.

That said, CRK Advertising has the freedom to collaborate with outside creatives at any time. Occasionally, it will work with outside creative teams. For instance, it collaborated with Fabien Baron of Baron & Baron on the brand's new men's fragrance, Crave.

The in-house agency admits that, if it came across the right team in the right agency, it would consider working with them. But its policy is typically to collaborate with top creative people and their studios rather than having a traditional agency/client relationship.

This article was first published on campaignlive.co.uk

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