Close-Up: Can in-house agencies really work?

Clients may gain control but lose creative and planning insight going in-house.

Few in the industry are predicting great things will come of Jaguar's decision last month to dump Euro RSCG and take its global advertising in-house. "Let's just say, they are not going to have a Honda moment," one agency executive surmised.

The brand's new in-house agency is to be called Spark 44 and will be based in California, with three international hubs located in the UK, Germany and China. It will be run by the former MRM London chief executive Alastair Duncan, the consultant Steve Woolford, the ex-DDB creative Werner Krainz and Fraser Communications' creative director, Bruce Dundore.

The move will undoubtedly have cheered the likes of Kevin Morley, the former Rover marketing director, who is no fan of ad shops (he once referred to agency people as "expensive lunch bandits").

In the early 90s, Morley took over the company's marketing budget and set up his own agency to run it. He went on to sell the company to Bates Dorland. Sadly, neither Rover nor Bates Dorland exist today. Morley, though, has fared better, resurfacing recently on Channel 4's Secret Millionaire.

The general assumption is that Jaguar's decision was motivated by cost and a desire for control. However, cost efficiencies may not come as standard.

Publicis UK's chairman, Nigel Jones, argues that running an in-house operation could, in fact, work out to be the more expensive option: "Agencies are very efficient. I would like to see a cost analysis of an in-house agency."

Many point out that the greatest risk is to the creativity of the brand's advertising. An in-house agency would fail to attract the best talent because the best creatives would not choose to be confined to just one brand, the argument goes.

Also, the brand's creative work is restricted to one group of people, whereas an agency network can pull in a variety of creative directors to work on a project if a team can't crack a brief.

The brand also risks losing its objectivity, as agencies come with a much-needed alternative point of view. "When the client is your paymaster, you are not going to push as hard to do good work," one agency chief maintains. In addition to creatives, an in-house agency would be unlikely to lure top planners who add that vital element: consumer insight.

The counter-argument is that because an in-house agency works directly with the client, it has a greater insight into the client's needs and business. In addition, all senior management are focused on one brand, with none of the distractions of the new-business race or other equally demanding clients vying for attention.

One alternative to moving advertising in-house is to create a dedicated team within an agency or agencies to work solely on one brand, such as Team Volvo, the dedicated unit comprising staff from the Volvo agencies Euro RSCG 4D, Arnold and Sapient. Here, a brand can get the attention it demands, but is also able to draw on the vast agency resources.

This solution is not without its problems, though. Some warn that these dedicated teams need to be constantly changed around to keep the creative work fresh.

Bringing advertising in-house is ultimately an advertiser's way of taking back control of its brand. It is for agencies to prove that the best option is to relinquish power and let the brand be led into unexpected places. Then, hopefully, the phrase "expensive lunch bandits" will remain a relic of decades past.

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CLIENT - Graham Daldry, creative director, Specsavers

"Creatives love working direct with clients, and clients love working direct with creatives. Creatives enjoy working direct because it removes the need to do agency business, which can be a barrier to good work.

"Of course, there are caveats. You need to be disciplined, with robust project management and processes. And you still need great clients, because the adage holds truer than ever that clients get the work they deserve.

"A direct client-creative relationship will help to ensure they do."

AGENCY HEAD - Nigel Jones, chairman, Publicis UK

"I think the real issue is: can you really attract the top creative talent to an in-house agency?

"Creatives want to work on a variety of creative opportunities. In most cases, in-house agencies have one brand and therefore it's not attractive to the best talent. By definition, they can't attract the best creative talent because creatives want big canvases to work on.

"Also, they won't attract the best planning talent. You need that objective consumer insight to inspire creatives. Planners who work in in-house agencies will be too close to the brand.

"The beauty of great planners is they sit between the brand and the consumer and can be objective."

CLIENT - Will Orr, director of communication and brand marketing, British Gas

"For most clients, I think 'going in-house' is probably a bad idea. Agencies continue to do things that most clients can't. That said, there are exceptions that work.

"Specsavers 'does it itself' and it's a strong campaign. It can also be the right approach for designor fashion-led brands, where pure image is more important than an 'advertising idea'.

"Looking at its work, I wonder if that's where Jaguar has (mistakenly) got to. It has made its cars brilliant again, and deserves a campaign idea to match.

"Personally, I reckon it would be more likely to get that from a good agency."

AGENCY TEAM HEAD - Jorian Murray, global brand director, Team Volvo

"There are brilliant examples of when in-house agencies work. One is 4Creative, which is one of the best agencies in London. Similarly, the Gap work of the 90s was very good. But then there are terrible examples, like Rover in the 90s.

"The bottom line is that you have to have talent. It depends on the people. If you set it up with the right talent, it can work.

"If it is a dedicated unit with people who look at the brand the way an outside supplier would, and keep it separate from the marketing team, it should work."