In this concluding piece of a 3-part discussion with Mike Papson, the Director of Merck Creative Studios ("MCS"), Mike discusses the value differentiators between an in-house and external agency and offers insights on how to successfully market an in-house department.
Andy: At Merck, MCS is not the only option for our clients--they can work with external agencies. Given this fact, what would you say are the key differentiators in our value proposition versus an outside agency? What do we have to offer that an outside agency can't or doesn't?
Mike: MCS possesses Merck knowledge and business knowledge that many agencies don't. Like any good company, the procurement team at Merck is going to squeeze all external agencies on cost so at some point, the cost is going to be relatively the same for a client whether they use us or an outside vendor. Then it's going to come down to delivery, so we have to be creative and we have to deliver on time. We also have to deliver a quality product or service at the end of the day, or we're not in the game. If we do all that, then the major differentiator I can see that we need to play up is around the relationship we have with our partners and really bringing value that they can't get from somebody on the outside. If we understand all of our business partners and their businesses, we can link them because we know what's going on across the entire organization. We can leverage synergies across the various BUs [business units]. We can start to then leverage different types of assets, different types of cost structures to help out clients and the company as a whole even more. That's really where we can find that benefit that our clients are not going to see from an outside agency.
Andy: That insight busts a huge myth that exists out there among a lot of creative team leads. A lot of creative team leads have gone down the path of showing the value they bring from a cost-savings perspective. They're now finding, to your point, that they're hitting a wall with this approach, because one of the shifts that is happening is that Procurement is becoming more and more savvy about the purchasing of creative services. They're pressing the vendors, the outside agencies who typically were charging much more than an in-house group, down to a point where that difference between what an in-house team charges and what an agency charges has really narrowed. We now have to focus on other ways we bring value to our companies.
Mike: Yes. Then I think it gets to another issue where it's about efficiency. This is the point we're starting to get to now at MCS. Now that we've got our process in place, we can now measure it: we know what resources and time we're using to deliver services. We know how efficiently and quickly we execute and this speaks to meeting the clients' needs in a quicker fashion, which is becoming more critical to them. There's not a lot of time to put projects in place--the clients don't have time. The practice of turning things around faster and faster and engaging in continuous improvement is an area where we can continue to leverage and help improve things beyond what an outside agency could do.
Andy: Right. Because of the fact that we're in the organization, we're embedded here.
Mike: Right. If you can become a good business partner with your client, you can now start to impact the entire chain, not just what is in your shop. As you know, there's a lot of thinking and work up front that the client is doing or that is part of other processes that we can support. If you're just an outside agency, you're waiting for them to throw you something over the fence for you to work on. Because we're within Merck, we can become one with that client, [which allows us to] broaden that scope from what was the end-to-end process [to] the entire process.
Andy: I have one last question relevant to what you just said. I know that you've made attempts to push out our services to new departments and clients directly and that you're trying to get them to embrace the value that we bring and to start working with us more as an internal agency. What are some of the challenges you've seen in trying to do that, and how have you shifted how you're trying to do that going forward based on some of the walls you may have hit initially?
Mike: One of the walls we've hit was the team really not understanding the business side of the house. It's critical to have the in-house team educated about the businesses they service or to bring in somebody who understands the clients' businesses. An example would be our new Creative Director, Peter, who's come on board.
One of the values that Peter brings is he came from the business side in GHH (Global Human Health, the Merck pharmaceutical division) and was involved on the client side in working on many of the types of projects that we're now looking to do. He comes in understanding our clients' world. He understands the products. He knows the people, and he has the relationships. They trust him. He at least gets an opportunity to do the pitch and provides us chance to win the business.
So that's one way that that we can grow the business. Also, in some cases, we've changed out the team on the Merck side a little bit to leverage staff who have a lot more business knowledge in particular areas to working with the clients.
A second approach is that we're not trying to conquer the whole world, because the entire business is too big. We've focused on picking a couple of key clients who have been using outside agencies and not using us, and trying and see if they would give us an opportunity [to] really demonstrate that we can add value and we can provide the services they need at the level they're expecting.
We have to win those clients one at a time. That's the only way we'll gain that respect and that relationship with the individual because, as you know, some of these clients have worked with agencies for many years. That's what has happened there. The agency has, over the years, been able to win them over, they delivered, and they have a relationship there. It's hard for clients to just walk away from that. They have to feel comfortable that when they come over here, it's going to work. I think it's a matter of doing it a little at a time. I don't expect us to say, "Okay, all of a sudden, we're going to bring in 10 million dollars of GHH work all at once," because I think that when you try to double the size of your business starting that quick, there's a whole bunch of things that you have to fight through within the team, because the structure that you need to do all that work at a very quick pace is challenging, and you do not want to drop the ball on anything. I think building it a little at a time with small pieces of business and continually trying to add to it is a better approach than to try to grow it too quickly and then risk having problems and not be able to deliver on your promise.
I believe it's important to reiterate that Mike comes to his role from a more operational and financial path. This background affords him a perspective that you may find valuable if, like me, you came to your current position as a designer or copywriter. I've learned much from Mike during my partnership with him at Merck, and my understanding and appreciation of the importance of decidedly more business-centric practices has helped me grow as a creative team lead. I hope you benefit from his insights as well, and I'd encourage you to seek out colleagues who can help you build on your business acumen.