Arnott's CMO David McNeil says in-housing will "never be on my radar"; scores his dedicated full-service Publicis agency, The Neighborhood
"In-housing has never been on my radar. I'll probably go to the rocking chair with it off my radar. It's just not something I see bringing material enough advantages in the industries that I've worked in."
David McNeil was sitting with his daughter recently watching TV when an Amazon ad hit the screens. She quipped that it was "unusual - I thought everything they did was online".
It was a telling moment for O'Neil, as Campbell Arnott's Asia Pacific CMO, about marketing.
For him, it's all about the "and". He's been around long enough to pick the emerging flashpoints in the marketer's minefield. In-housing is one of them and the suite of new technologies from AI to VR are others.
McNeil has spent the bulk of his career at Unilever and Campbell Arnotts and one lesson stands out - there is no either/or in marketing.
"If you come back to the main thesis here, the genius in the CMO of today is knowing what the proportionality should be at any given time for any given problem - and to keep an open enough mind to swing the pendulum from one extreme to the other," he says. "It's not about just blindly chasing a metric or a trend but being open to flex the mix, whatever the situation."
That worldview means McNeil is unconvinced about the roaring trend by marketers to in-house all manner of marketing and communications capability.
"In-housing has never been on my radar," he says. "I'll probably go to the rocking chair with it off my radar. It's just not something I see bringing material enough advantages in the industries that I've worked in to get the right alternative model. That's against the market trend but we're really happy with The Neighbourhood model. It's delivering all the flexibility, agility and accountability we want but without the dangers and risks of bringing it in-house."
Indeed, Campbell Arnott's has just clocked 12 months with its new centralised Publicis agency initiative across media planning and buying, creative, digital, social, content, promotions and beyond, called The Neighbourhood. It's housed in Saatchi & Saatchi's headquarters and McNeil is a fan.
He's just had the scorecard report from Aprais in which McNeil says "mutual satisfaction" on both sides of the Neighbourhood partnership is in the mid-80s. While McNeil is bearish on the long-term benefits of in-housing, he believes the traditional agency approach needed shaking up at Arnott's.
"I do think creating this truly integrated model, a truly agnostic model with a real single point-of-contact and fee structure is the way to go," he says. "I'm really happy with it. It's working well."
So much so, McNeil says he wouldn't know which agencies most of the people that move in and out of The Neighbourhood are from in the Publicis network.
"For the 12 months I've worked with The Neighbourhood, I'm told that at different times we've had people in there from every single brand within the Publicis Groupe. Apparently there are some from Saatchi, Leo Burnett, some are Herd, some Digitas, some Spark Foundry. Other than knowing they bring a media or digital or creative capability to the room, I wouldn't have a clue which agency brand they work for within Publicis."
Hybrid model trumps in-house
McNeil credits WPP for the initial trigger to move to a centralised, full-service, dedicated Campbell Arnott's agency model, based on what he'd seen at Ford and Colgate. After a process 15 months ago which initially involved exploring what each of the larger holding companies could do, Publicis won out.
And it's the basis of where McNeil diverges from much of today's marketing debate around in-housing. These hybrid agency-brand models are of course not new but McNeil says the extent of his experimentation stops with agency partners, not in-housing capability.
"We've developed an agency model with Publics Groupe so rather than a single agency marriage, we've joined forces with an entire crowdsourced set of capabilities that we can put bespoke teams against unique problems or situations," he says.
"My view is it's not that the marketing function is approaching extinction or that the CMO is approaching extinction. I think marketers like me who are able to bring forward the fundamentals of marketing and add to it a more contemporary spin, they're going to be much better placed than the 'pure' tech mad modern marketers of the future. I'm quite perplexed sitting on the sidelines looking for returns on AR, VR, AI, analytics something, tech something else. Lots of people are talking the talk but I struggle to read as many success stories."
Long versus short
McNeil hasn't be stationary either. His allocation to TV, for instance, is now about 30% and he's a fan of the long-term brand building versus short-term sales work of Dr Peter Field and Les Binet. Except their 60-40 ratio in favour of brand building is flipped at Arnott's.
"So the big evolution for us is in our free-to-air TV allocation - it's down to near 30 per cent of our mix. We're spending probably about 40 per cent of our mix in channels that are conducive with the impulse nature of our categories. So we've been heavily into out-of-home. But the rest has really been around generating content for online and social and really helping to accelerate conversation that's happening in social to build our overall earned media proportion. But our playbook is areal mix of the old menu, of the classics and then evolving it."
McNeil's views on the long-term brand building versus short-term sales debate are likely reflective of the conundrum for many marketers.
"We'd like to be spending more on the long-term," he says. "But we have a business model currently that does put a high premium on short-term delivery, not the least of which is our distribution model and the regularity of that. We're more 40 per cent on the long, 60 per cent on the short. But some of our investments go 100 per cent on the long and we've been doing I think some really nice work with The Neighbourhood. So we're fighting short-term battles while we take the Arnott's brand into a place we think it can have a much more sustainable, profitable position as a big brand within the market."
Spend or cut?
Behind the hectic innovation and expansion program McNeil has been spearheading is a drawn out process in which Arnott's will likely be sold off by Campbell's to a private equity group for an estimated $3 billion. It will be one to watch - will Arnott's new owners invest or cut? The debacle at Kraft Heinz and the cost-out program driven by it's private equity owners should provide some lessons.