Head of Account Management at Lake Star Media
15 May 2007 12:13pm
As Online media gathers speed well above the expect levels, will agencies who make money via management fees and media kickbacks (Google Best Practice) continue to rule the roost with the expertise levels contain within or will we see big brands and eventually small to medium companies moved it all in house.
The potential saving can run into 1000's even when employing people on higher salaries with the added bonus they will only be working on the clients products and not as many agencies operate with individuals working up to 10 accounts each whether they say there are working exclusively on the clients, this very rarely happens.
With the larger agencies joining forces we may see a super power scenario with profit taking precedence over clients requirements as investment companies get involved, this could just be the catalyst for clients to take control back from the agencies and deal direct with the media houses which as we know is Google's preferred choice already.
E-Business Consultant at Dan Barker
15 May 2007 13:34pm
hi, Julian, how are you?
I don't think agencies will end any time soon. Even if your scenario comes true, there will always be the small/medium-sized business clients who make up the bulk of the market.
In fact, 'digital' expands the opportunity for SMBs to advertise hugely (lower costs, simpler logistics, greater volume). While a small percentage of those may bring it in-house, most will be happy to outsource it (meaning no issues with training & managing staff, greater opportunity to 'change provider' & better results through using experts).
I'm sure the agency situation will carry on more or less as it is - the same situation you see with web design/development, accountancy, haulage, etc - some do it in-house, some outsource, some do a bit of both. Meaning there will be a few big agencies, a larger amount of mid-tier agencies & a whole boatload of small agencies/one-man-bands. While the larger agencies will swallow each other & the mid-tiers every now and again, those lower down will also grow to fill the space.
Freelance Web Consultant at architxt.net
15 May 2007 14:32pm
In my experience in-house usually fails to deliver due to a) politics b) lack of experience (especially commercial) c) lack fo specialist technical skills and d) being too / too little ambitious.
External help is always very very precious.
17 May 2007 16:15pm
I agree that some companies mainly SME with have to use agencies for the future at least.
But the larger Blue chips clients lets say a spend of £30,000 a month which is bottom end figure (I know some spend upto 100k, 200k+) based on a 15% management fee thats a fee of around £4500 a month so they could employ 2 people on 30k salaries direct so 1 seo and 1 ppc professionals.
Looking at some of salaries offered a well know search company is offering a PPC team leader 25K so the option to bypass the agency and offer superior wages and in most cases a much better overall package.
Joint Managing Director at JiWire Europe Ltd
18 May 2007 10:38am
Certainly not! However the landscape is definately changing!
I feel that over the next 12-18 months there will be an increased level of migration from external full service to in-house as PPC spends rise, the larger advertisers become more savvy and the next generation of SEM tools coming to market simplify Campaign management and Optimisation.
Agencies will still have a very important part to play in terms of on-going training, strategy and planning but there will be a shift.
As a next generation SEM Tool provider SearchRev welcomes the transition from external to in-house and is in consultation with a number of very large UK advertisers who wish to license our technology and bring Search in-house. These advertisers have done their cost benefit saving analysis exercises and in most cases they will save many 100's of thousands of pounds a year. In their eyes these savings certainly justify recruiting and training their own teams.
The Advertisers that SearchRev are working with realise it will not happen for them over night and that they are taking a calculated risk in bringing Search in-house, but by collaborating with their agencies who can continue to add value they will have the right mix they need to succeed.
Agencies should not worry as there will always be a steady supply of new advertisers who are eager to spend more in order to play catch up and move themselves up the ladder - these advertisers will certainly be looking for a full service model.
Managing Director at Shine Marketing
18 May 2007 11:12am
A major problem with bringing specialists in-house is that they miss out on the shared hands-on learning that an agency can bring. In a fast changing environment like search this is a major problem and it's rare that you'll find individuals who can maintain the collective knowledge that an agency can bring.
More established tactics like email and online advertising have migrated to in-house over the last few years as tools and understanding have simplified the job, so I've no doubt that search skills will make the move eventually.
I think we're looking at years rather than months before this happens on any grand scale though.
18 May 2007 12:13pm
I think there are a couple of things left out of those cost calculations:
a few additional costs in hiring an employee
All of that, plus the massive 'skills and experience' problem that Loz mentioned, I don't think agencies will die any time soon!
If you think cost is the biggest issue in all of this & you think of SEO/PPC as being 'commodity' jobs (I don't think that they really are), then India/China are probably a bigger threat to agencies than in-housing. It will be interesting to see whether the changes in telemarketing/software development will be mirrored in online marketing over the next few years.
agency/in-house aren't mutually exclusive
Agency/In-house are just two different models, each of which is better suited to a different situation. They're not exclusive either - there's no reason why (as most blue chips realise) you can't take advantage of the benefits of both.
Business Director at Indigo Consulting
11 June 2007 14:34pm
Yes, I agree with daniel. Different situations call for different implementation models. For eg., a lot of companies prefr to keep their core strategy inhouse and outsource everything else... I look after the UK operations of an Indian company and we get requests for non-commodity based services as well.
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