Freddie Liversidge will be speaking at AdExchanger’s Programmatic IO conference on May 16-17 in Las Vegas. Click here to register.
In 2016, a scandal rocked the advertising industry. A damning Association of National Advertisers (ANA) report revealed US ad agencies were pocketing profits through opaque practices like taking kickbacks from media companies and reselling media to clients at a markup. The findings spurred some brands to move agency work in-house or create in-house agencies.
One of those brands was HP. The computer hardware and software company decided to build a digital media agency in-house for seven reasons, said Freddie Liversidge, HP’s global head of media.
“HP centricity,” or “complete ownership and understanding” over its media, was front and center, along with a desire for more transparency in its media buying, increased data protection in the wake of GDPR, better performance and cost savings. Other benefits included adjacency, or people’s ability (pre-pandemic) to collaborate with those sitting around them, and the ability to move faster internally.
Though 92% of companies with in-house agencies still work with external agencies, according to a May ANA report, it concluded that in-house agencies are here to stay. In 2023, 82% of ANA members have an in-house agency, compared to 78% in 2018, 58% in 2023 and 42% in 2008.
Gaining ground
Four years into its in-housing journey, HP hasn’t gotten as far as it wanted in terms of transparency and control of its data, as it still has to hand over its data to walled gardens like Meta and Google. But performance has soared, Liversidge said. The brand has seen a 50% increase in ROI globally, and viewability gains have led to $14 million in additional revenue.
“We spend a lot of time thinking about how we make time for people to optimize campaigns and to do the critical work,” Liversidge said. Agencies are often “squeezed so tight” they can’t dedicate the necessary resources to performance work.
The company has also diversified its ad buys. “When we first started, we talked about being a programmatic team: search, social, DSP-based buying,” Liversidge said. HP’s media mix now comprises social, retail media, OOH, TV and print advertising. The brand buys more than 70% of its media – and 90% of its digital media – in-house.
Despite bringing many agency services in-house, HP still works with external agencies, such as PHD, an Omnicom media agency, to buy traditional media. “The buying power of the Big Four is just so strong,” Liversidge said, and many publishers prefer to negotiate rates with major agencies or holding companies.
Outside agencies also offer aid with strategic planning, thought leadership direction and access to expensive tools, such as Nielsen, Comscore and TGI.
Bumps in the road
Though an in-house agency offers clear advantages, building one from the ground up also poses challenges.
“I dreaded my first three months at HP,” Liversidge said. “Can’t say [procurement and finance] was the most exhilarating work, but it was fundamentally critical.”
Another major challenge was staffing. HP hired 100 of its roughly 150-person agency team during the pandemic. It had to make the case for working on one in-house brand to attract candidates, then create growth opportunities to retain them. It also had to weigh the risks and benefits of having permanent versus contract employees.
Yet in the final analysis, standing up an in-house agency has been well worth it. “You’re incentivized by the business, not by anything else,” Liversidge said. “There’s no other pitch, no other money to go after. If HP has a good year, you have a good year.”
