Retail Marketing

Why are retailers launching their own marketing agencies?

January 2022 7 min read Written by Papirfly

In this article, you’ll learn…

  • The factors influencing retailers to introduce in-house agencies
  • Examples of retailers who have taken this novel step
  • The pros and cons of this approach

We know that the retail industry never slows down. Every year consumers’ expectations for fresh products, offers and content grows – and retailers must provide these faster and more frequently than ever.

Agile is the goal. However, a traditional stumbling block on the path to “agile” is the reliance retailers – particularly those with a national or global presence – place on external agencies. Timing is everything in retail marketing, and any log jam at a partner agency can prevent campaigns landing at the optimal time.

This is why numerous retailers, such as UK giants Boots in September 2021, have taken it upon themselves to cut out the middleman. By launching their own in-house marketing agencies, they are looking to accelerate output, enhance efficiencies and present a stronger proposition to their supplier brands.

Here, we will explain why retailers worldwide are now taking this massive step, and outline the pros and cons of this full-on approach.

In-house marketing agencies – why now?

There are several factors – some very recent, others that have bubbled under the surface for years – that have compelled some of the world’s biggest retailers to take this previously absurd concept of becoming their own marketing agency:

Higher demand, tighter budgets

Shoppers expectations’ are higher than ever before. They expect consistent, personal engagement with their preferred retailers, whether it’s a unique special offer in their inbox to active content across social media.

But, as the demand for content only continues to grow, marketing budgets are shrinking. Many retailers were hit hard by COVID-19, and have had to tighten their belts in a number of key areas, marketing included. This includes the amount they have to spend on external agencies – compelling retailers to find ways to produce more in-house.

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Overdependence on external agencies

Alongside the pressing need for retailers to reallocate their marketing budgets, there are also the longstanding concerns that many in-house marketing teams encountered when working alongside a third-party agency:

  • Longer turnaround times due to competing priorities
  • Brand inconsistencies caused by a lack of understanding
  • Lengthy back-and-forth over amends and updates
  • Costs associated with comparatively simple jobs

Many retailers, such as M&S, Verizon and Procter & Gamble, have already committed to taking more of their marketing in-house in response to the current landscape. By going even further in establishing their own fully-functioning agencies, others are aiming to take their production levels and support for suppliers to a whole new level.

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The importance of omnichannel

The ways that retailers can interact with customers – both physically and digitally – are constantly increasing and evolving. Being ever-present across these platforms requires a multi-skilled team with experience in many areas of marketing: design, paid advertising, social media, print, email marketing, etc.

The introduction of an in-house agency puts all of these experts under one roof, and with their sole focus on you, the retailer, and your suppliers.

The death of third-party cookies

It probably hasn’t escaped your attention that Google is set to depreciate 3rd party cookies by 2023. This has unnerved numerous brands who are often reliant on this data, as their customer base does not typically purchase their products directly from their websites.

The first-hand information gathered by in-house retailer agencies, based directly on their customers’ behaviour, could therefore help supplier brands gain a deeper insight into their target audiences, and use this agency to produce better-targeted campaigns.

Great news for the suppliers, and a great selling point for the retailers that can provide this capability… 

Competition to secure suppliers

Even the biggest retailers need to present a compelling case to potential suppliers. You want to make sure they feature in your stores over a competitor, and forge strong, long-term relationships.

Giving suppliers access to an in-house agency, capable of creating marketing assets for their purposes in-store and beyond, helps retailers foster these lasting bonds, and offer an incentive that most retailers globally can’t deliver (yet).

4 retailers that have established their own agencies

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The catalyst for this article, Boots introduced Boots Media Group (BMG) in September 2021, with the aim of helping third-party brands deliver personalised campaigns out to their customers.

As well as enhancing their own internal advertising, the BMG agency will be capable of treating each of Boots’ suppliers individually, with unique channel mixes, marketing strategies and schedules to suit their requirements.

Plus, Boots will give suppliers access to the rich first-party data it holds across its 17+ million loyalty member cards, and tools measuring cost-per-sale, click-throughs, conversion rates and more. This means they will be perfectly placed to supply their partners with a deep insight into how customers are behaving straight from source, to structure future campaigns.

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In August 2021, Walmart announced that they had selected Publicis Groupe to support the development of their own in-house media agency. This is with the aim of deepening their connections to their diverse customer landscape through a wide range of omnichannel solutions.

The establishment of the Walmart Media Group is based around providing an end-to-end, seamless service to the retailer’s customers, and making their journey’s as robust and engaging as possible.

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Now we go all the way back to 2019 to Target, another heavyweight U.S. retailer, establishing Roundel as their own in-house media network.

This offers content creation and other advertising services for brands lining their stores’ shelves, such as Disney and Unilever, as well as a number of premium partners that don’t feature in their stores, including Mastercard.

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Expedia Group Media Solutions is the advertising arm of Expedia Group, one of America’s most prominent online travel shopping organisations.

Through this in-house agency, they provide brands with digital marketing solutions that reach and engage the millions of people that travel with them every year, giving these brands a powerful means to connect with audiences around the world.

What are the benefits of this approach?

Attractive proposition to suppliers

With retailers in competition not only for customers, but also suppliers, the promise of a dedicated in-house agency, and access to invaluable first-hand data from shoppers, will be a big incentive for suppliers to get on board.

Faster turnaround times

By creating a dedicated space where all content and strategies are crafted in-house, there is no enforced gap between formulating a campaign and getting it to customers. No third party. No added layers. No barriers. 

Extended capabilities in-house

While an in-house marketing team will typically be spinning a lot of plates among each other, an agency will ensure that a retailer has access to professionals from throughout the marketing spectrum. These specialists will have a strong understanding of how to get the absolute most out of each campaign.

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Real-time behaviour

Again, when speed is of the essence, having insight into the first-hand, real-time shopping habits of your customer base will enable an agency to create highly targeted campaigns based on these behaviours. Marketing is more effective, allowing you to forge watertight relationships with your audience.

Locked-down consistency

One of the ongoing concerns with using external agencies is the risk of brands being misinterpreted or poorly applied. As the agency works specifically for the retailer, there is much less risk of brand consistency going awry.

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What are the risks?

Of course, while there is plenty of reasons as to why retailers are launching their own marketing agencies, it is not an approach that is free of risk:

Coordinating global campaigns

If your organisation has locations spread across the globe, it is possible for differences in culture and language to impede the effectiveness of your content. Plus, if all work is coming from a single space to be disseminated to teams worldwide, it is possible for streams to become crossed, and the wrong asset ending up in the wrong place.

With this in mind, it is useful to have tools in place to coordinate your international marketing:

  • A Digital Asset Manager (DAM) to store all approved assets in one globally accessible space, and share these with the relevant teams worldwide
  • A campaign planner that makes it easy to see all past, present and future campaigns at once, with information on when particular assets will be required
  • Language and localisation features in your content creation suite, ensuring that all content produced for a particular market is appropriate for that audience
  • A central brand portal housing brand guidelines and cultural considerations for any member of your marketing team to review at any time

All of this and more becomes possible when you use a solution like BAM by Papirfly™.

Convincing sceptical suppliers

As we’ve outlined above, there is a lot for suppliers to be excited about when it comes to retailers establishing in-house agencies. However, like any upcoming innovation, it has naysayers.

First, the supplier must place a great deal of trust in the retailer to put their marketing in the agency’s hands, and achieve results through this. If there is a long-term relationship already in place, this is less of a problem – for a new supplier, there could be some initial hesitation.

Secondly, there might also be some scepticism over what will take priority – the retailer’s own products and branding, or their suppliers’. So, if you intend to take this approach in your organisation, be prepared to do some convincing for several suppliers.

Costs of in-house marketing

Finally, there is the all-important consideration of cost. There is a very good reason why so many retailers over the years have outsourced work to external agencies – it was typically far less expensive than hiring an in-house marketing team, let alone your own full-blown agency.

With this in mind, and the fact that budgets are more restrictive than ever, having the tools in place to streamline marketing production and make it more accessible to everyone is vital to countering the expense of establishing and maintaining an agency.

Therefore, a solution like BAM by Papirfly™ is absolutely critical. Easy-to-use, preset templates empower anyone, regardless of design experience, to produce high-quality, perfectly branded assets in a matter of minutes. Times-to-market are shortened significantly, and you are enabled to create more digital and print assets than ever before – at no extra cost.

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How BAM lets you do more in-house

We hope that you have enjoyed this introduction to the phenomenon of marketing agencies emerging from established retailers. While it may not be something you’re thinking about in the immediate future, I would watch this space – this is just the start of a trend that could change the way retail marketing is approached long term.

Nevertheless, it is never too early to give yourself the foundation to take marketing in-house and take your budgets further. Get in touch to learn more about BAM by Papirfly™, or get hands-on with it by arranging your personal demo.

by Papirfly

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