Bose has built an in-house entertainment division that already accounts for up to 40% of its marketing, and its CMO says he has not used a creative agency in years. It is a sharp signal about where brand spend is moving.
A brand that makes its own entertainment does not need someone to make ads for it. That is the quiet threat inside Bose's move.
Bose has built an entertainment division inside the company, and its CMO Jim Mollica says he has not used a creative agency in four or five years. Speaking at Cannes, Mollica said the entertainment arm already accounts for a third to 40% of the brand's marketing and he expects that to reach 60 to 65% by the end of this year or next. The two facts are connected.
His reasoning is blunt. As more money flows to creators and brands make fewer traditional commercials, Mollica argues the creative agency in the middle stops earning its cut. His words: the smart ones go directly to production companies, because you do not need the agency. When he needs specialist craft he hires freelancers. When he needs production he goes straight to the people who make the thing.
Why it matters
This is the agency model being hollowed out in real time by a client who decided to own the capability instead of renting it. Bose is not saying creativity does not matter. It is saying the traditional agency is no longer the best way to buy it, because the work has shifted from campaigns to content and from commercials to a constant feed.
For Australian brands and the agencies that serve them, the signal is loud. The value an agency adds has to be sharper than "we make the ads," because a growing number of clients are building that muscle in-house and going direct for the rest.
The share of Bose marketing its CMO expects the in-house entertainment division to reach within two years
What to do about it
If you run a brand, ask what you should own versus rent. Always-on content and audience building are increasingly cheaper and better done in-house.
If you buy agencies, demand more than execution. Strategy, distinctiveness and results are worth paying for. Making the ad, on its own, is not.
Build a content capability before you need it. A brand that can produce its own entertainment has options a brand dependent on an agency does not.
Go direct where it makes sense. Production companies and skilled freelancers can deliver craft without the layer that used to sit on top.
The brands turning themselves into media companies are not waiting for permission. The ones that hesitate will rent what their rivals own.