Laying The Foundation For Your In-House Agency
Building In-House Agencies
There is a major shift underway in the advertising industry. Advertisers are moving certain operations and capabilities from external agencies to in-house agencies.
The capabilities being internalized differs widely. The size of the advertiser is greatly influencing the scope of the service migration under consideration. The larger the advertiser the greater the potential list of activities which could be brought in-house effectively and efficiently.
No matter the size of the advertiser there is one core service which should be considered foundational to support any in-house agency: Digital Asset and Agreement Usage Rights Management.
Managing digital assets, agreements, and their associated usage rights in-house as a shared service today is akin to the centralization of Accounts Receivable and Accounts Payable which took place in the mid to late 2000s.
The centralization of digital asset and agreement management is driven by three measurable benefits: Risk Reduction, Production Efficiency and the elimination of Redundant Expense.
This benefit trifecta is achieved through the transparency which is created when centralized visibility into the procurement, licensing and management of digital assets is achieved.
Let’s explore the benefits of each of the value areas identified.
Most advertisers have 10’s if not 100’s of agencies that they work with today across the globe. Many of them are boutique firms which address specific geographic market or product niches.
Having one of these agencies evaporate overnight along with all of your purchased assets and agreements is unfortunately not unheard of. When this situation occurs recovering assets, campaigns, licensed rights documentation, etc., is difficult if not impossible to accomplish.
Advertiser Brand To Agency Model
Multiple Brands Model
The challenge is due to the fact that each agency is responsible for and is tasked with the procurement of content (music, video, stock photographs, voice overs, talent, photographers, etc.) as the advertiser’s agent. The associated licenses / agreements are often cataloged by each agency. Cataloging could entail saving a copy of the license / receipt in a shared file folder, filing a printed document, saving an email, logging data in a spreadsheet, etc. Each agency does it differently with no commonality in form or format. There is little to no transparency of these agreements to the brand and even less to the advertiser.
If an advertiser is fortunate enough to avoid such a catastrophe, there are other risks lurking in this outsourced model.
Advertisers assume that any media used by an agency is appropriately checked against the licensed usage rights prior to it being used. Unfortunately, more often than one would like to believe that is not the case. In instances where asset usage violates the terms of the license the advertiser is 100% liable for any legal claims. This due to the fact that an agency is an agent of the advertiser and liability flows directly to the advertiser. Lawsuits in the $10’s of millions for asset misuse are quite common.
Aside from the monetary aspects of misuse the side effect from such an event is the damage to a brand’s reputation. This is more difficult to quantify in monetary terms, but is no less impactful to an advertiser.
Agencies operate on an expense pass-through model. They pass through any costs to the advertisers on top of their creative and production fees. This creates a situation where advertisers and their brands are paying for the same redundant service infrastructure to manage digital assets and agreements at each agency they use.
In return for that investment agencies are building capabilities which they shop out to other clients. If you ask me, that’s not a good use of advertisers’ working capital. The fix to this investment leakage is quite simple.
Instead of absorbing the cost from each agency for:
- A Digital Asset Management (DAM) system and a
- Usage rights management system or manual process
Enable each brand and their agencies to:
- Access the centralized DAM containing all of the brand’s digital assets and
- Enable the checking of the associated usage rights in real-time.
By doing this the risk of losing assets should an agency go out of business is eliminated. So too is the risk of incurring costs associated with the violation of an asset’s usage rights.
Agencies can still procure and create assets, but those assets would reside in the centralized DAM not the agency’s. Likewise, the associated usage rights (licence) would reside in the centralized agreement and asset usage rights system. Both systems would be under advertiser control providing complete transparency to asset and usage information.
Aside from the obvious benefits from:
- The consolidation of assets,
- The inherent ease of access to every owned asset and
- Gaining visibility into asset usage rights (compliance),
this centralization strategy also significantly reduces one of the key hurdles of changing agencies: The dreaded agency switching cost.
Transitioning from one agency to another is now simpler and faster because this model eliminates the need for a data migration project for assets, rights, and contracts.
With this model advertisers can now provide their brands greater agility in an increasingly dynamic market. Brands can now choose the right creative agency at the right time for their market. Existing and new agencies gain full access to the brand’s portfolio of assets and their associated usage rights immediately.
There are other cost reductions from the elimination of agency services advertisers no longer need.
As an advertiser have you ever wondered how many pictures you own of a stream running through a mountain valley, the Eiffel Tower or a blonde child with a big smile holding a red balloon?
It’s amazing how many duplicate purchases are made each year by agencies representing advertiser’s brands. It’s not agency’s fault, they are just meeting the brand’s needs. It’s not the brand’s fault, they are just trying to get their message out. It is not until you establish a centralized repository of information and perhaps a supporting organization (“Digital Office”) does the level of waste become obvious.
By centralizing DAM and asset usage rights capabilities advertisers can now control access to and make available the entire inventory of assets under management quickly and easily. Centralization also ensures that assets, when used, are being used in compliance with their licensed rights because those rights can be checked in real-time (I’ll cover why real-time clearance is important in a future article).
In the cases where an asset is owned, but the rights for the intended use are not covered by the license it is typically much cheaper to extend those rights from the licensor than it is to procure an identical asset with new rights.
Depending upon the size of the advertiser and the number of brands under management savings can be in the $10s of thousands annually.
Every Journey Starts With A Single Step
Whether you are already on your journey to moving your agency in-house or are considering a move I hope that you found this article interesting and thought provoking.
If you’ve already started your journey or are just considering one, I’d love to hear more from you.