What you need to know:

• Production company Palomina is bidding to capitalise on marketers' desire for sharper, cheaper and more transparent work by cutting out creative and media agencies and going direct.
• The start-up has officially broken cover with foundation client Sportsbet and is now actively wooing brands.
• Co-founders believe there is huge scope for growth: About 20 per cent of Australian brands have in-house capability; the US market is closer to 80 per cent.

After quietly working with brands on a project basis, production company Palomina officially launches this month with Sportsbet as a foundation client, bidding to woo marketers with a direct-to-client approach. Co-founders Rachel Gilkison and Kate Merrin told Mi3 the in-housing trend is in full swing – and there is huge growth potential as brands seek cost efficiencies, transparency, control and ads that drive results.

ANZ 's CMO Sweta Mehra told Mi3 recently the bank is building a significant in-housing unit for the "grunt" work although still backed the role of agencies in key roles. "I have to say it pains me to pay two thousand dollars, five thousand dollars for tiny edits here for a banner, a tiny edit for a video, which frankly my son could do," she said. "So the intention is that a lot of the strategic work, a lot of the innovation will keep happening with agencies outside. A lot of the grunt work, which is about scale, that is what we will be bringing in-house.”

The confidence for in-housing's continued rise from Palomina's co-founders is based on Australia's current market landscape versus international markets. While estimates suggest around 20 per cent of brands currently have some kind of in-house capacity, the US market is closer to 80 per cent.

Producing campaigns across TV, digital, paid social and radio, Gilkison and Merrin aim to cut out the middlemen – creative and media agencies – enabling brands to spend more budget on quality ads that drive engagement and results. 

“Being a small team means our client’s content is centrally managed, ensuring greater transparency and constant control of the production process, project costs and most importantly quality standards.  Clients want full transparency, great work, better creative services, flexibility and an innovative creative way of working,” said Merrin.

“A lot of clients have in-house capabilities already, and we can help them grow that. Going through an agency and then to a production company, things can get convoluted, and clients can feel that while they are part of the process, they’re not integrated into it. we're trying to make it more of a partnership with the client, rather than us being a supplier,” said Merrin.

The model also enables Palomina to work directly with the brand team to ensure the message is not lost in the media process.

“Nobody understands a brand better than the brand team and every time they work with a new vendor, whether that's an agency or a production company, all they are doing is reteaching the DNA of their company, and vendors are experienced and able to take that on board, of course. But when you are working with an internal team, then you don't have to do that sort of baseline learning pace about the brand, because they already know it,” said Gilkison.  

Palomina has already put its collaborative model to work with foundation client Sportsbet, which operates an extensive in-house agency incorporating creative, content, partnerships, PR, small scale video production, design and media, with a staff of 65 people.

“We’ve been working with [Palomina] to bring our above-the-line campaigns to life for some time now," said Jason Thatcher, head of brand and advertising at Sportsbet. "They continually find excellent talent to do the job and go above and beyond to bring our campaigns to market on budget and on time.”

Room for both

While Gilkison and Merrin are adamant their approach won’t replace the traditional model, they do believe there is room for a direct-to-client production company to help brands create large scale production projects in-house.

“Clients are producing an increasing amount of content and the time is right to disrupt old habits and evolve the production process,” said Gilkison.  

Merrin added: “There's definitely a need for the current production company model and I don't think that will change. We're just trying something different because the world is changing, and as more clients build in house capabilities, they are looking to work this way. We don't want to take work away from existing production companies and advertising agencies, we just want to provide a different way of doing things for people that are looking to change.

“There are a lot of content companies out there that can go in and make content at a lower level, whereas when it comes to big brand campaigns and big-budget work people feel that they have to go the traditional route – because that's how it's always been done. We're proving that's not the case, you can come to somebody direct and work as a partnership and do it together."