“Who is your agency’s most important client? Your agency.” This quote narrated in anonymity holds a lot of weight as we can witness heavyweight brands brandish their ‘in-house agencies’ with pride.
On April 1, 2023, Sudhir Sitapati, chief executive officer, Godrej Consumer Products Ltd (GCPL), took to LinkedIn to introduce ‘A Light Box at the end of the tunnel!’
‘A Light Box’ is led by Tom Dawes (global creative director, GCPL), and supported by Shalini Avadhani (lead creative strategist) and Gaurav Kapoor (deputy general manager – brand and communications). GCPL invested Rs 1,000 crore globally for the creation of this agency with a ‘a bunch of crazy, creative people who dreamed, bathed, dressed, coloured, smelt and even killed with our brands,’ the post read.
The trend of brands setting up in-house creative shops is not new. In 2015, food aggregator and delivery company Zomato came up with one. Over time, brands such as Paperboat, Swiggy, Bookmyshow, Byju’s, Dunzo, among others, too established in-house creative units.
According to an Association of National Advertisers study in 2023, 82 percent of the advertisers set up in-house units – a rise of 78 percent in 2018.
According to ‘Global trends in agency in-housing: 2023 update’, 21 percent multinationals have plans to set up their own in-house agencies. This reflects a contrast from just 17 percent in 2020. The study also highlighted that 56 percent planned to move their digital production from external agencies to in-house.
“In-house agencies are more efficiency-focused while traditional agencies are more effectiveness-focused. That’s what their game is all about,” said Neeraj Sharma, former senior vice president, L&K Saatchi & Saatchi.
Evolution and history
The roots of in-house agencies can be traced back to the early 20th century, from the activities of Swadeshi entrepreneurs. Hemendra Mohan Bose, considered as the ‘Father of Indian Sound Recording’, was the manufacturer of Kuntalin hair oil and Delkhosh perfume.
According to Chitto Ghosh, a veteran adman, Bose, who did not have any in-house agency then, did print advertising campaigns, which, at best, can be called the “predecessor of in-house”. Sometimes, Bose got his very good friend, Nobel laureate late Rabindranath Tagore, on board to write for his brands.
The roots of in-house agencies can be traced back to the early 20th century, from the activities of Swadeshi entrepreneurs. Hemendra Mohan Bose, considered as the ‘Father of Indian Sound Recording’, was the manufacturer of Kuntalin hair oil and Delkhosh perfume.
Tagore was well-known in the arena of Bengali advertising, where he was seen in over 150 advertisements, endorsing ghee, skin creams, sweets and harmoniums in the first three decades of the last century, shows a media report.
More companies join the fray
Fast-forward to 1946: Adi Patel cemented the foundation of Everest Advertising, with the support of Parle Products, an Indian confectionery company. Parle, which was the first client of the agency, financed Patel, and over the course of time, went on to on-board other clients.
Automotive manufacturer Mahindra & Mahindra, too, established an in-house agency, named the Press Syndicate, in Mumbai, sometime in the late 1940s. Tara Sinha, a legendary advertising professional, took over Press Syndicate and split the agency into two. The agency ran until the late 1990s, states Ghosh.
UK-based Bata Corporation, which was established in 1894, entered Indian shores in 1931 as the Bata Shoe Company. As Ghosh recalled in his conversation with Storyboard18, the multinational footwear company introduced its in-house agency in the late 1960s, after Lever International Advertising Services, popularly known as Lintas, commenced operations.
According to a media article, Lintas, which was established in 1899, merged with Margarine Union, a Netherlands-based company, in 1930. This led to the creation of Unilever in the US.
Though Lever Brothers remained as the name on record, Lintas was spun off as an independent agency, based out of London. Though the agency continued to be owned by Unilever, Lintas was allowed to seek non-competing business.
Lintas entered Indian shores and started operations in 1969. Its first chief was Sanath Lahiri, a legendary figure in the history of Indian advertising and marketing. Though HUL and its products were the focus of the agency’s attention for years, today, it takes up mandates for other brands too.
Dilip Chatterjee, a name well-known in the Indian advertising fraternity, had joined Bata’s Indian arm as a town planner. He was in charge of Batanagar, a neighbourhood in West Bengal, also well-known as a colony of Bata employees.
UK-based Bata Corporation, which was established in 1894, entered Indian shores in 1931 as the Bata Shoe Company. As Ghosh recalled in his conversation with Storyboard18, the multinational footwear company introduced its in-house agency in the late 1960s, after Lever International Advertising Services, popularly known as Lintas, commenced operations.
It was an exclusive township that the company had developed at the outskirts of Ganga. Bata also developed townships in the outskirts of Patna (Bihar) and Sahagang (West Bengal).
As Chatterjee’s assignment neared its end, Bata wanted him to stay put, and offered him the position of an advertising director.
As recalled by Ghosh, Chatterjee, who had no experience in this arena, told Thomas J Bata (a Czech-Canadian industrialist who ran the company from 1940s till the 1980s), “Why are you delegating this responsibility to me? I’m not a man from advertising or marketing.”
Bata’s response was: “Listen, boy! The pillar of advertising is our Bata stores, which are almost 500 metres or one km away from one another.” During that period, Bata popularised its brands through its stores. Chatterjee took up the role.
When Chatterjee joined the in-house agency of Bata, he soon realised that there were deficiencies within the setup. The challenges revolved around working with a limited number of people, followed by creative fatigue or boredom.
Crunch in-house agencies face
“When a brand grows, the company has to explain itself to different geographical markets. Here, in-house agencies feel a resource crunch. Only professional or national agencies can handle those kinds of challenges,” Ghosh explained.
Hence, Bata’s entire operations shifted to design packaging, visual merchandising or in-house branding. Later on, Bata began hiring agencies such as JWT and ASP (Advertising Sales Promotion) for its advertising responsibilities. The operations of the in-house agency have ceased. ‘
Later, in the 1980s, The Emami Group too started its in-house agency. But, after the company became a multinational brand, it stopped advertising operations through its in-house agency. “It still exists, but its operation is limited to packaging and certain in-house branding,” Ghosh said.
ASP, which was floated by the Birlas, was established by Ghanshyam Das (GD) Birla. He formed a trust that promoted the agency, recalled Ghosh, who had been a part of ASP as the head of copy.
ASP handled the mandate of brands such as Ambassador cars, Orient fans and United Commercial Bank (UCO Bank). The other in-house agency of Birlas was Creative Communication (CC), which along with ASP, was very popular during the 1960s and 1970s.
According to Kaushik Roy, former chief creative officer of Mudra Communications, Larsen & Toubro (L&T) had a very active ‘in-house publicity department’, as they would call it. Over the years, it was very dependent on the management.
“In some cases, they felt that they could do work which would be as good as an above-the-line agency. So, they requested the management to give them a chance to come up with their own interpretation of the brief. That’s how L&T started becoming more and more independent and started doing its own work,” he highlighted.
Later, in the 1980s, The Emami Group too started its in-house agency. But, after the company became a multinational brand, it stopped advertising operations through its in-house agency. “It still exists, but its operation is limited to packaging and certain in-house branding,” Ghosh said.
How Mudra Communications was set up
The late 1980s also saw the seeding of another advertising agency, Mudra Communications (now DDB Mudra Group). Atchyutani Gopala Krishnamurthy (AGKrishnamurthy), who is credited with the establishment of Mudra Communications, started his career as a typist at Calico Fabric.
Calico was looked after by Gira Sarabhai (late Indian architect and designer) at a later stage. Krishnamurthy came under the fold of Frank Simoes as a typist, an advertising legend, who looked after the mandate of Reliance Industries’s textile business, Vimal.
Simoes nurtured him and promoted him as an advertising executive within his agency. Since Ambani was the client of Simoes, Krishnamurthy developed a great rapport with him.
During this period, Krishnamurthy is said to have asked Ambani: “Why don’t you establish your own in-house agency?” That led to the establishment of Mudra Communications in 1980. The responsibilities of the agency were handed over to Ambani’s younger son, Anil.
Roy adds to this. At some point, when the business was large enough and the team had grown, Krishnamurthy requested that he be given the opportunity to look at the other clients who would not be in competition with Reliance or Vimal.
They would be the ones that Mudra Communications would be able to handle and be able to establish to the advertising world that they were capable of running as an independent advertising agency. But, the journey was not free of roadblocks.
“I joined Mudra Communications in 1992. By then, Mudra Communications was 12 odd years old. Even at that stage, when I approached new clients for business, the first question would be, ‘Isn’t Mudra Communications the in-house agency of Reliance? So why should we give you business?’ It took a while for people to gradually realise that we had other clients as well,” recalled Roy.
Indian multinational consumer goods company Dabur had established an in-house agency named ‘Adberg’, stated a communicational professional, who requested anonymity. Media buying, which was done by Adberg, was solely restricted to looking after the advertising and marketing affairs of Dabur and its brands.
Right from the time when Roy got involved in Reliance’s mobile business, beginning early 2000, Reliance made it very clear that since its office was in Navi Mumbai, he would not be able to work with an agency which would have its office in Mumbai.
“They wanted a setup for which they were willing to give every support in terms of the infrastructure. Reliance continued to have an in-house setup for that particular business, though it was not given any different identity. That particular unit of Mudra worked exclusively for the Reliance mobile business and nothing else,” Roy reminisced.
Mudra Communications, which was bought out by Omnicom in 2011, merged with DDB Worldwide, got rebranded as DDB Mudra Group, and went on to conceptualise path- breaking campaigns for so many brands, including Rasna and Cinthol.
Indian multinational consumer goods company Dabur had established an in-house agency named ‘Adberg’, stated a communicational professional, who requested anonymity. Media buying, which was done by Adberg, was solely restricted to looking after the advertising and marketing affairs of Dabur and its brands.
But, despite being called an agency, it was not given the status of a ‘function’ within the organisation. As of now, the operations of the agency are non-existent. “There is a huge difference between an agency and a function. If I am servicing only one brand, I am an individual resource and not an agency,” he said.
Cheil, which is the in-house agency of the Samsung Group, does take up assignments for other agencies. That is primarily handled by Cheil X, which handles the mandate of brands such as MG Motors, JK Tyres and UNICEF. The same applies to Innocean too, the in-house agency of Hyundai, that onboards the responsibilities of other brands.
Pros and cons
According to Sharma, in a traditional agency setup, there is no consistent income. “If you are in a traditional setup, you are pitching every month or six months a year,” the former L&K Saatchi & Saatchi executive stated.
“When part of a traditional agency, you have to be on top of your game. You should win awards. There is Cannes. There are the Effies awards. Hence, the sheer hunger to produce the best work, compared to competition, is much higher,” he said.
At the in-house agency level, there is better control on which metric to target. There is better transparency in terms of the process and the outcome. Hence, an in-house agency has an edge over a traditional set-up.
Meenakshi Menon, founder, GenSxty Tribe, agrees with Sharma. According to her, an in-house agency is also an opportunity for people to look at developing capabilities and building understanding. When work is being done at the client’s end, there is an opportunity to do deep immersive work in terms of how the consumer reacts to it.
“Ultimately, as a brand, what are you interested in doing? Are you interested in skimming over the surface or are you interested in building long-lasting relationships with your customers,” Menon asked.
For long, discussions have ranged around poor pay in the ad sector that have witnessed attrition. Isn’t this aspect also one of the reasons for talents to choose a ‘brand studio’—as KV Sridhar, global chief creative officer, Nihilent and Hypercollective, calls them—than work in a traditional set up?
At the in-house agency level, there is better control on which metric to target. There is better transparency in terms of the process and the outcome. Hence, an in-house agency has an edge over a traditional set-up.
Sridhar is quick to clarify that the process wouldn’t sustain in the long run. “If you work with advertising agencies, even if you don’t get money in the short term, there is growth. When you do great breakthrough campaigns, your talent will be recognised, and you will see continuous growth in your life,” he said.
One example of a stellar in-house creative work is Byju’s. In 2022, the ‘Masterji’ digital campaign won a Silver Lion at Cannes Lions International Festival. The in-house creative team of the edtech brand handled everything — right from conceptualisation to ideation.
Today, with the extreme polarisation, isn’t ‘playing safe’ with ideas also an impediment to creativity at the in-house agency level?
Read More: Why did Godrej Consumer Products set up an in-house ad agency?
Menon is of the opinion that the mainstream agency plays even more safe while generating ideas for campaigns. Sometimes, the brand takes the risk and it backfires.
One such example is Tanishq’s Ekatvam campaign that was released in 2020. A Muslim family is seen celebrating the ‘godh bharai’ (baby shower) of their Hindu daughter-in-law. This left the internet divided, leading to a massive backlash, and finally the campaign was withdrawn.
“That was the work of a mainstream agency (Laqshya Media Group). The brand took the risk. And it backfired. Sometimes it works, sometimes it doesn’t. Risk-taking is more to do with the brand and less to do with where the ideas come from,” explained Menon.
In-house agency v/s traditional agency
Womb Communications started out as an agency dedicated to a single brand. Today, the agency has a roster of clients. “A lot of companies have made name because of one client, because the client supported them either in equity participation or gave their account and supported it from outside. That’s what makes a difference to building an independent company,” Sridhar said.
Energy drink Red Bull’s entire strategy and marketing is in-house. Even the multinational beverage company, The Coca-Cola Company, has an in-house agency named The Content Factory. “The first thing is that a lot of people don’t want agencies because the pressures are incredibly high. So, agencies are finding it very difficult to get good talent, and today, the talent would rather work outside the agencies,” Menon said.
However, Menon also mentioned that the in-house agency setup works only when there is consistent output requirement. If there is going to be a need to have a campaign running for 12 months of the year, the in-house agency set-up makes sense.
“Today, if you look at traditional media, the external agency model works better. In the case of non-traditional media, the in-house agency model works better. If you want to grow on a bigger scale, you need to be independent,” she added.
Energy drink Red Bull’s entire strategy and marketing is in-house. Even the multinational beverage company, The Coca-Cola Company, has an in-house agency named The Content Factory.
Sridhar seconds her point. “It will be a myth if you think you can build a great advertising agency within your own office premises. The culture of the companies is different from the culture of an advertising agency. You need to be independent to grow, isn’t it,” Sridhar asked.
Read More: In-housing trend grows: Two-thirds of major multinationals now have an in-house agency