IHAC chair: ‘If you push against it, and don’t want to work with internal agencies, you’ll lose’

It may have sounded like an ominous warning, and perhaps the title of a Terminator film: ‘The Rise of the Hybrid: How In-House Agencies Can Partner With Externals to Get the Best of Both Worlds’, but Chris Maxwell, founder & CEO of Lution & executive chairman of the In-House Agency Council stressed it was all about everyone in the industry working together rather than against one another.

Maxwell said: “As an industry – whether you’re on the client side, or you’re on the agency side – you should know this is coming. The businesses that figure out how to partner well with in-house agencies with their clients will be the ones who’ll win. And if you’re an external agency and you’re pushing against this trend, it’s not going to be good for you, I can tell you that.”

He added: “Figure out how to partner with internal agencies and internal media teams, and internal creative teams, and give them what you’re really good at: creative diversity, great strategic thinking. Give them that, and they will love you for it. If you push against it, and say you don’t want to work with internal agencies, you’ll lose.”

Maxwell was joined on stage at Mumbrella360 yesterday by David Sutherland (GM, Yes Agency), Priya Kanniappan (group marketing director,, and Tim Gill (content and creative director AUS/NZ for MYOB) and the panel discussed their experiences in-house and then benefits and capabilities of working with a model that is trending upwards.

The idea for IHAC came about at 2019’s Mumbrella Retreat in Tasmania. Today, it is Australia’s first and only industry body focused on businesses that run in-house and hybrid models.

Maxwell led the M360 discussion on the power and potential of combining external agencies with those in-house. Speaking with a range of senior leaders who have adopted the hybrid approach, he’ll explore how and why they did it, and look at what the future holds.

Moderator Chris Maxwell, with Priya Kanniappan, Tim Gill, and David Sutherland

The session revealed the findings from IHAC’s industry survey examining the penetration, benefits and challenges of this double-barrelled strategy:

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Priya Kanniappan, Tim Gill, and David Sutherland

The key challenges for in-house agencies included: managing workflow (44%), project prioritisation (37%), expanding capabilities (35%), recruiting top talent (35%), delivering great creative (33%), and industry knowledge (30%). However, some big benefits were: better knowledge of brands (84%), cost efficiencies (84%), speed and agility (67%), consistency of output (65%), overall ease of working with (63%), dedicated staff (60%), greater control over output/data (56%) and institutional knowledge (51%).

Kanniappan spoke on the issue of speed and agility: “I describe our model in two parts: the first part is around core competencies, so things like performance marketing, marketing automation, research to some extent, and graphic design all sit in-house. And the reason we do that is that we need to be agile when it comes to those functions. We need to be able to move at pace. But also building that capability in-house becomes a bit of an asset for our marketing function and our business overall.”

Kanniappan added that for them, those areas where Carsales needs to be thinking about continuous optimisation and how they move the needle on growth need to sit in-house. But she said for large strategic briefs, this falls into the second part of their model, which involves a lot of creative work and thinking, “that’s where we go external”.

She said Carsales has a roster of smaller agencies that they work with for these larger projects.

The business had previously tried all in-house and all external, but the hybrid model has given them the best balance, Kanniappan said.

She also added Carsales generally avoids the retainer model for external agencies.

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Gill said the MYOB model was “a little bit different” from the Carsales setup.

“We have a broader set of skills within our agency, because we have more clients that we have to service,” Gill said.

He said their in-house agency helps the events team, and the social team and they do creative as well as campaign work, technical marketing components, and internal comms.

“We need more skills across these areas,” Gill said.

Sutherland said their model was different again.

“Obviously we’re part of M&C Saatchi, we were built in close collaboration with Optus and the team there. Very specifically though, the idea – with Optus being a huge telco and retail being a key component – was to try and bring the retail function closer to the business and closer to the brand. So our main role is to manage all the retail work.”

Sutherland said they partner with a “village” of external agencies. “We support them with a lot of their execution and delivery,” he added.

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The key takeaways for clients and agencies were distilled down into these 5 tips for working in a hybrid model:

1. Start with an end in mind

2. Get on the same page

3. Leverage each other’s strengths

4. Share ways of working and processes

5. Work, learn and play together

Julia Vargiu, Australia’s director at SI Partners Global, asked this cracking question in the Q&A session at the end: “In terms of the commercial viability for the agencies that might lose part of their client business after going in-house – they might be getting just the strategy, they can’t increase the pricing and many clients don’t value and pay very much for; there’s getting the whole middle part stripped out of their business, they’re losing good talent, they don’t have the beautiful campuses to encourage training and progression, and then they might be left with really just the high-volume, low-margin work – they might be getting a little bit of strategic high-value work, a little bit of the high-volume, low-margin work – it can be pretty detrimental to an agency’s financial viability and on top of it, they have to pitch for not to be retained as an agency, while the in-house agency is seen as the retained business – can you speak to that, about the agencies you want to collaborate with – which they are excited to do – but how will it affect their long-term financial viability?”

Gill from MYOB responded: “In our recent process of going and searching for an external agency – that was a paid pitch – and we also paid above market for that pitch, so we value creative, we value those agencies, so we would never ask them to do it for free… Strategy is one part of it, because we don’t have the skillset, but they’re still doing all the delivery of that project, so if it’s going to be a film, or it’s going to be digital material, etc, they’ll still deliver that. What we’ll do then is take that and deliver a version of that for a specific event like later on in the year. So, we don’t strip it all out, we see the value in them coming up with the idea, and we see that as a fair approach to doing the work. We do a lot of the digital work that we can’t afford to send out simply due to the sheer volume of it, so we’ll do that internally. We just use the externals for the big pieces. We see it as not stripping it out, rather it’s using their skill better to do that work.”

One audience member who got a lot out of the session commented after the presentation that it would be interesting to see the historical data on in-house agencies to determine whether the industry changes are cyclical – rather than this being simply a new upward trend toward in-house agencies.

Research source: Kantar Australian In-House Agency Landscape Report in conjunction with IHAC, 2021.


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