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More than one model in the sea, part one: how organisations are taking the reins of their advertising

The marcomms industry is a fluid place. Clients come and go, new screens and platforms lure audiences’ eyes, talent moves from place to place, and in the face of these changes, the most efficient way to get a job done may not always be the same. Erin McKenzie takes a look at some of the clients doing it for themselves and the changing role of agencies, and finds there's more than one model in the sea.

By Erin McKenzie | March 13, 2019 | features

Pop the hood of The Warehouse Group’s headquarters on Auckland’s North Shore and you’ll see its studio space and marketing department is buzzing.

Thirty-nine creatives make up an in-house agency and a hire drive is set to see it turn into about 45 by the end of the year.

The Warehouse Group is one of a number of organisations locally and internationally that has brought creative and production capabilities, that have resided in agencies, inside its four walls.

Control and cost-saving are to be gained by making the move, and helping head up The Warehouse Group’s efforts is Andrew Berglund, its new executive creative director.

The title has also spread its wings to fly beyond the agency nest and when it landed at The Warehouse Group it’s just one of a number of changes afoot – Berglund thinks of it as a “well- funded start up”. 

Alongside the increase in staff, the strategic creative thinking will also grow to match the production capability in-house that is currently 70 percent of the division’s focus.

“We are still predominantly production-focused because of the legacy of the in-house studio and I would like to move it to a point where we get 50:50 concept, strategic thinking:production.”

And beyond just coming up with ideas, Berglund and the team have an ambition to do live broadcasts, film-making and radio – “you name it,” he says.

Berglund joined the organisation to lead the internal and external creative teams and agency relationships, crossing over from agency side to do so.

His career has seen him work in a global executive creative director position at WPP Group, lead Samsung’s in-house creative agency Cheil Worldwide, and most recently be chief creative officer and founder of Human. International, based out of Amsterdam and Seoul.

When asked what led him back to New Zealand and into The Warehouse Group he says it was New Zealand’s innovation, with the likes of Soul Machines’ work in the AI space that piqued his interest. And when he saw what Jonathan Waecker, The Warehouse Group’s chief marketing officer as of November last year, was building in-house, Berglund saw an opportunity to get involved.

However, it couldn’t just be any organisation Berglund would go in-house for, pointing out The Warehouse Group’s breadth of brands was an attractive offer.

“If I came here and it was a one trick pony, I would have got bored quickly. I crave the diversity. There might be some creatives that enjoy the one brand but for me personally, the attraction with The Warehouse Group is its portfolio diversity.

“There are four very diverse brands – The Warehouse and Warehouse Stationery are in close proximity to one another but then Noel Leeming and Torpedo 7 are diversely different.”

In The Warehouse Group’s Interim Report 2018, group chief executive officer Nick Grayson wrote about its transformation agenda, saying additions to the executive team ensure that transformation will be delivered.

Waecker was one of those hires, and Grayson said it’s crucial that it maximises its marketing and communications capabilities to deliver for its customers, who are beginning to expect customisation and personalisation when engaging with brands.

“Jonathan will be working on building an integrated marketing capability that delivers for our business and customers,” Grayson said.

However, alongside the transformation, in July it was announced a leadership restructure will see up to 140 full-time jobs lost, including supervisors and team leaders.

The interim report 2018 also showed for the half year to 28 January 2018, the group retail sales for the period were $1,598.1 million, down 0.9 percent on the same period last year. Its gross profit of $522.5 million was up 0.7 percent and other costs of doing business (CODB) were up 3.3 percent on the prior period. Suffice to say, as the traditional retail world attempts to evolve in the face of online competition, the pressure to change – and to save costs – is on. 

Seeking efficiency

As its leadership restructure sees a drop in staff numbers, its in-house agency is on the rise. Berglund says it’s because the company is able to be more agile and can respond to the market faster with one reason being Waecker sitting opposite him.

“Conversation with the CMO team is fluid and agile, ideas are far more adaptable to the situation and reactive to the moment unlike with an agency when you have to schedule a meeting, see if the creatives are available and then chase the client.”

The need is particularly relevant in the age of social media, Berglund adds, when brands need to get to things quickly.

Air New Zealand was one of the first New Zealand companies to look at a new way of working at the pace the modern marketing landscape demands. Senior manager of content strategy and creative services Maria Ryan-Young says it’s been building up capability for years. Its global brand in-house content team supports domestic and international brand marketing campaigns, and the main design resource supports the wider business at Air New Zealand.

She says it started six years ago, when Air New Zealand made the commitment to bring design services in-house to support the varied needs of its business, with what was then predominantly product design and print collateral design and production. Ryan-Young says it in-housed everything from in-house communication tools, training manuals, signage and event design.

More recently, in the last two years, it’s continued to expand those services to include in- house video and photographic expertise, digital capabilities and specialist producer expertise.

Within the Content Hub–the in-house creative services team–there’s a full-time team of 15, plus contract resource that supports as the workload requires (this includes additional design, creative concepting, video direction and production).

She says other teams also support the creation and production of content for owned digital channels, retail sales advertising and its AirPoints programme.

Ryan-Young says there are multiple reasons for bringing it in-house and one of those, like The Warehouse Group, is the ability to be nimble.

She says there are multiple efficiencies in terms of timeliness, cost saving and being able to tap into the inside knowledge of its team for guidance on content production.

Looking at Air New Zealand’s FY2018 results released 23 August, it achieved its second highest profit of $540 million, an increase from the prior year’s result of $527 million. It had a record operating revenue of $5.5 billion, up 7.4 percent.

Looking at sales and marketing, under operating expenditure, it increased to $357 million in the year ending 30 June 2018 after spending $352 million in the year ending 30 June 2017.

As well as efficiencies, the internal team aids the single vision for how the Air New Zealand brand shows up globally across hundreds, if not thousands, of customer touchpoints every day.

“Having one team internally supporting the breadth of our business with how our brand architecture and expression are represented ensures consistency – as we are typically the ones doing much of the design,” says Ryan-Young.

An example of what it’s capable of is the ‘#crazyaboutrugby’ superfan video that launched on Facebook in August. It was concepted the week prior, shot by the in-house team, edited overnight by a production company partner, and on social within 12 hours of finishing filming.

Days later, the video had attracted hundreds of comments from people sharing the names of their rugby superfans who would be keen to see an All Blacks game.

However, like all work, in-house or agency-produced, there’s a chance it could go wrong. Last year when Pepsi pulled an ad featuring Kendall Jenner, it drew criticism of the in-house method.

Pepsi’s in-house shop came under fire for producing an ad trivialising demonstrations aimed at tackling social causes by remedying the situation with a can of Pepsi.

Many believed the ad could have benefitted from some external perspective, with one Reddit thread including the comment: "In-house creative directors are jaded, tired old-timers who simply want to get paid and go home."

When asked if there’s a challenge of creatives being too close to the company when they are in-house, Ryan-Young says: “We are constantly looking outside our category and offshore and exposing the team to that inspiration. We have the benefit of being able to travel, to have great partners in our network from whom we draw insights, trends and creativity.”

In the past, she says working client-side in a design or creative role may have appeared a little tame, but in fact, now those roles offer an incredible amount of scope, challenge and reward.

“Bringing more of that creativity in-house ensures the team is fully invested in the brand’s success.”

Air New Zealand still works closely with its creative and design agency partners that bring new thinking and concepts to the brief. These include True, Host/Havas, Designworks, lead production partner Exposure, and FCB – which works with the brand’s New Zealand market development team.

Ryan-Young says it matches the project to the right creative and production solution – so for some projects, it may tap partners for some parts of the project journey – be it creative strategy, concepting, or production. But every project involves the in- house team to some degree.

Over at The Warehouse Group, Berglund is similarly confident about its creative capability in-house.

When asked if there is any concern that being in-house may narrow its creatives’ scope and therefore the quality of the work, Berglund says it’s developing brand manifestos to help. He explains the brand manifestos it’s creating give it precise parameters for the work. He says they give a foundation to the work and set rules that help inform the team of how to speak to consumers as a brand.

“The rules are in place so if you do flip on a moment and push something out in a minute, you know it’s part of the parameters and therefore the brand.”

And to ensure its in-house team doesn’t become a closed ecosystem, it will be inviting in experts and talent as needed and is formulating creative workshops to inspire the team with guest experts in production and creativity.

“As we grow and we bring more of this talent in-house, I’m convinced other creatives will think ‘hey I want a bit of that’ and that will move The Warehouse Group creative calibre forward.”

There certainly seems to be some momentum within The Warehouse Group’s HQ but not so much that it has driven clear of supporting agencies.

Just this year it appointed Omnicom Media Group (OMG) as the single media strategy and buying partner for its family of brands: The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7. And while the single media agency partner is about unifying its approach to media, attribution and measurement in an innovative way, there are still multiple creative agencies across its range of brands, as each has its own identity.

Berglund says it works collaboratively with its agencies and each party brings its own knowledge and skills to the table to better the result.

“I’m convinced if we bring those skills together like the Marvel Universe, we can do amazing things as a collaborative collective.”

DDB works with The Warehouse Group and, when asked about the in- housing trend, chief creative officer Damon Stapleton says models should be put to one side because they’re not what makes something succeed.

He believes there’s too much judgement on how things get done, when rather it should be about the outcome.

“If it’s an agency that works for you, excellent. If it’s another model that works for you, excellent. Don’t get hung up on the labels because it doesn’t mean anything, especially for creatives.”

He says creatives don’t care about structure, they care about trusting relationships and working together to make things better.

“The reality is great work does great things because you have gone beyond what someone has asked for and somewhere they didn’t ask you to go.” 

This story was originally published in the 2018 Marketing issue of NZ Marketing. To subscribe, click here.

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