As a Brit, I am constantly asked by my American clients, colleagues and friends for my views on Brexit, the UK’s departure from the European Union. Whatever your political leaning, this unprecedented scenario is causing disruption, uncertainty and anxiety.
This confusion echoes current sentiment within business communities on both sides of the pond, with many organisations experiencing unimaginable disruption, inevitably leading to extraordinary changes for people, structure and process.
So, it should be no surprise the client in-housing of certain marketing disciplines and exiting their long-term agency relationships is gaining traction – let’s call this Clexit.
And why wouldn’t they? For several years agencies have been offering ‘Team X’, built around client requirements, subsequently proving dedicated, integrated teams can be designed – and therefore redesigned – within client organisations.
Let’s be clear. Few clients are talking about taking strategy in-house and even fewer thinking about creative, thanks in part to Pepsi and Kendall Jenner. This is primarily about digital execution across search, social and programmatic. The benefits of cutting out agencies appear to be strong – huge savings in fees (many millions of dollars according to P&G) and a step-change in control and transparency, an issue well documented by a survey produced by the ANA.
Ironically, the facilitators of ‘in-housing’ are the very same tech companies responsible for disrupting many client businesses – those offering simple plug and play solutions with instant feedback via dashboards. And for pureplay performance-based businesses requiring multiple trading calls a day, they are unlikely to ever revert to an agency model, assuming they were ever there in the first place.
But for the majority of advertisers, they are potentially as misinformed and misguided as the British public when making one of the most defining decisions in a generation. The UK is now torn between a Hard Brexit with its wholesale separation from the EU, and the less drastic but less empowering Soft Brexit.
Whether it’s Brexit or Clexit, the claimed benefits are almost identical. Control, cost saving, transparency and speed of decision-making, all of which are important, but ignore many of the downsides of the dissolution.
Firstly, those clients leaving a wider union will narrow their perspective; having (agency) scale insulates from threats such as sudden changes in legislation and provides pooled learnings, unachievable when operating as a single entity.
Secondly, an unhealthy reliance on fewer partners can leave you exposed. Clients might discover the advantages of a tech stack partner could be undermined if that partner’s agenda changes and, as a stand-alone business, you have no way of sense-checking.
Thirdly, lacking knowledge and experience in non-core areas will hinder clients wanting to launch into new territories or start using new, untested media channels or tech. Agencies would offer them benchmarks and best practice guidelines.
Fourthly, being exposed to and understanding emerging trends is an area agency groups can afford as an aggregated investment but is much harder for individual clients.
Finally the fifth, and the arguably single biggest factor is the attraction and retention of the best talent. Across the Atlantic, Brexit is unquestionably stifling the supply of diverse and specialist talent and the very same can be applied to client/agency separation. Attracting great talent in the short-term is doable, but this same talent needs to be constantly nurtured, inspired and motivated, something that may be difficult to do in a smaller, isolated in-house team.
Asking pro-Brexit voters why they supported it so vehemently, the common answers centre on independence, reinvesting savings and taking control over the country’s destiny. I’m certain these still resonate with the majority but sadly it’s become evident these are theoretical ambitions unable to be divorced from the harsh downsides of separation and isolation.
For clients about to embark on this journey, I would urge that you strongly consider a ‘Soft Clexit’ that mitigates some of the risks highlighted above. While any decision may be reversible, the short-term damage could take years to fix.