It is alarming for those in the ad industry that are defending legacy business models, but exhilarating for anyone who recognises this is a smarter, more agile, more connected way of working.
It’s the beginning of the end, one agency chief said, after hearing that Vodafone was no longer using a big network agency for most of its digital media buying and bringing it in-house globally – with independent, digital agency Brainlabs acting as a consultant.
But there was another way of looking at how this FTSE-100 advertiser was taking greater control. It marked the decline of a traditional way of working between brand and agency, yet it also signalled the start of something new and potentially exciting – if it works.
This is a chance to redefine the client-agency relationship. Trust and transparency aren’t the driving force behind this change, although these things do matter. Technological disruption is the big issue.
Brands know that digital communications have become core to how they do business and interact with customers. Then there is the rise of smartphones and super-fast broadband, which allows more agile working – for example, "co-locating" client and agency teams in the same place on a flexible basis.
And with a lot of digital media investment flowing to only a few platforms such as Google, Facebook and, increasingly, Amazon, it is easier for brands to strike direct deals with them.
For all these reasons, brands are right to bring their creative, their data and their media execution closer to the centre strategically and to have more of these capabilities physically "on-site" in their offices. Ideas blossom, collaborations happen and things move faster when people work together, face to face.
"Most of our clients have an aspiration to ‘in-house’ some of their agency services," one agency leader admits. Many online brands have not known anything different as they’ve always done their digital marketing themselves because it’s how they built their businesses.
A growing number of advertisers, including Lego, Revlon, Sky and Unilever, have set up an in-house agency and it can save money. Crucially, however, most don’t want to do everything in-house. As one FTSE-100 chief marketing officer says: "I don’t want to add 50 people to my headcount. If there’s a problem that crops up at 6pm, I don’t have to deal with it. I ask my agency and they’ll give me an answer by 9am the next day."
Brands are likely to adopt a "hybrid" model that combines both internal and external talent, tech and trading muscle.
Unilever’s creative shop, U-Studios, relies on Oliver, a specialist in running on-site agencies, which has embedded staff in the consumer goods giant’s offices.
Daniel Gilbert, the founder of Brainlabs, talks about "a continuum of in-housing – a spectrum, not an absolute" as clients have varying needs.
Things will keep evolving. Jessica Burley, global chief executive of M/SIX, who has staff on-site in the offices of Toyota and News Corp, says: "This new model is not going to be fixed."
WPP, under a new leader, and other ad groups must reorganise to suit this new breed of clients who expect a more flexible, consulting approach – not a giant agency network with huge property overheads and internal silos.
Outstanding, external talent and ideas are still vital. But the reason why in-housing and co-locating client and agency teams is compelling is that brands need to take more control and integrate their creative, media and data if they are going to serve their customers in a better, faster, more personalised way.
It is a huge opportunity for brands and all those willing to help them.
Gideon Spanier is the global head of media at Campaign.