What you need to know:

• Foxtel’s inhouse agency has been rebranded as Balboa and signalled its intention to start taking on external client work. The news comes as it hits the milestone of taking on about 90 per cent of all Foxtel Group work internally.
• The move comes after significant workflow management, operational improvements, campaign processes, forecasting tools, and a team structure based around ‘super squads’ opened up 25 per cent more capacity by improving prioritisation and alleviated pain points in delivery.
• Following the success of its latest Kayo Sports campaign work, Balboa tendered and won the ongoing campaign contract against incumbent external agency competitor, Special Group.
• According to Foxtel executive director of marketing and creative, Michael Nearhos, Balboa’s cost effectiveness runs into the double digits against traditional agencies – and it’s a cheaper proposition he claims it can sustain.
• Per Nearhos: “That [iterations per campaign] number has been trending really well and certainly improved over time. We know we are faster, we know we are cheaper – significantly.”

Super squads, sophisticated forecasting tools and prioritisation management, hiring from outside category, tiered packaged campaign sizes from Platinum to Nickel – it’s a mix of ingredients that has Michael Nearhos confident his in-house agency team, Balboa, isn’t just good enough to do all of Foxtel’s internal agency work, but go head-to-head against traditional agencies externally too.

In-house Agency Council (IHAC) figures suggest as much as 70 per cent of agency work has flipped into the hands of in-house agency teams today, a complete switch to the 30 per cent reported just two years ago. While there’s debate whether the 78 per of marketers claiming to now have some form of in-house set-up are accurate in their workload oversight, there’s no doubt the scale has firmly tipped over at Foxtel.

According to Nearhos, transformation over the last two-and-a-half years has seen the media group’s in-house agency rebrand to Balboa – a nod to Rocky Balboa and his agility and fighting spirit. It’s now grown to 70 onshore creatives plus nearly 30 offshore creatives, buoyed by a partnership with in-housing consultancy Lution and complemented by a strong freelance bench. Today, the in-house agency does about 90 per cent of total work for Foxtel Group.

“Certainly our ambition and our vision for Balboa… is that it would all eventually come in-house soonish,” Nearhos tells Mi3. Current external agencies Foxtel still works with include Thinkerbell and Joy, which supported the Hubbl launch alongside Balboa, the latter undertaking all the production work.

“We’re not silly about it and we respect traditional agencies. If we think they have a place, then that’s fine. But certainly our ambition is to continue that internal move,” Nearhos says.

The ambition isn’t just to dominate within Foxtel Group. Balboa is also now open for select external business in the sports and entertainment categories. While not revealing the client’s name, Nearhos claims Balboa has already picked up third-party work worth the equivalent of five FTEs, and it plans to scale up each year. The services menu covers creative concept to production and delivery, brand design, advertising campaigns, promotional reels, original key art, marketing and editorial imagery and assets.

Nearhos is also convinced Balboa is a more cost-efficient option than traditional competitors.

“We’re just doing the charge out rates for Balboa, and we can comfortably sit well below the majors – the traditional agencies, where I think we can deliver just as much value,” he says. “We also measure the volumes of work and the campaign per type, per individual, and know the efficiency we’re running to. In terms of quality, all the campaign tracking shows we’ve just had several years of some of our best campaigns ever. We just keep improving them.”

Recent success with campaign work for Kayo Sports, for example, has seen Balboa knock out incumbent external creative agency, Special Group, in a recent tender for ongoing Kayo work.

"Special has been a highly valued partner of Kayo. We especially appreciate their efforts in reviewing Kayo’s brand strategy last year, which set the stage for Balboa to create the new brand concept, Get on Board," Nearhos says.

"There was some external agency work for Kayo recently that the internal team pitched and won back in-house,” Nearhos reveals. “Since that’s come in, it’s just been delivering.”

The new 2024 Winter TVC in Kayo Sports’ ‘Get on Board’ campaign, which aimed to broaden the appeal of streaming platform to families and casual fans, chalked up a 15 per cent lift in attention grabbing creative, a 13 per cent gain in likeability, an 11 per cent increase in consumers agreeing ‘Kayo is a brand for me’, and  a 16 per cent gain in Kayo’s brand positioning as the best platform for sport. In all, consideration for Kayo leapt 13 points versus the same campaign the previous year, the firm claims.

Finding 25% efficiency improvements while keeping staff happy

There’s been a whack of process and structural transformation to get Balboa to this point, starting with amalgamation of former siloed in-house teams at Foxtel and Fox Sports. Already, its supporting external clients via the Foxtel Media business including McDonald’s, Toyota, National Australia Bank and NIB and works with 100 or more brands annually, Nearhos says.

Thanks to hefty work to build sophistication in its workflow management, along with strong forecasting tools, Balboa has increased capacity by 25 per cent, making space for external work.

“The transformation has been a really important leverage point, and that has allowed us to really understand when, how and where we can do extra work or scale up and move resources around,” Nearhos says. “We’re not trying to boil the ocean or do work that’s not in sport, entertainment or news in some form. But we think there’s an opportunity to grow that also helps the team get a better outside-in perspective.”

It’s a far cry from when Nearhos came in, who admits there wasn’t much by way of process and “we weren’t measuring a lot”. Bringing on digital tools, workflow management to understand what the work was, who was working on what, and how long it would take has been critical.

“I’m such a believer that if you have a happy workforce, you do better work,” he says. “When you bring in process, change, transformation, you often have the pit of despair as the change takes hold. Certainly here that change cycle was quite short-lived – the team is certainly happier and the clients seem happier.”

From there, the team has built out campaign sizes from Platinum – a major shoot, multi-channel campaign – to Gold, Silver, Bronze and even Nickel – the latter reflecting a one-day turnaround on social activity, for instance. All have assigned SLAs, plus an expected number of iterations.

“That [iterations per campaign] number has been trending really well and certainly improved over time,” Nearhos says. “We know we are faster, we know we are cheaper – significantly.” He wouldn’t divulge numbers but said the savings easily go into double digits.

A big step forward was structuring the team into ‘super squads’: There’s an entertainment super squad working across Foxtel and Binge; a sports super squad working across Foxtel, Fox Sports and Kayo; a Hubbl squad; a Foxtel brand squad; then an ad sales Foxtel media squad.

“They act like mini-agencies within an agency – it’s full service from creative director to content creatives, editors, designers and motion designers,” Nearhos explains. “We can work across that base and if we have something that doesn’t neatly fit into those areas, we will form an Agile team around that. We have lots of project work going on that doesn’t neatly fit.”

Combined with forecasting tools, this has helped manage pain points in delivery and improve processes enabling Balboa to take on more work.

“I don’t think there’s any agency or creative outfit in the world that’s ever heard ‘I’m getting absolutely everything I need’, “ Nearhos comments. “Demand always outstrips supply. So a big part of this role is managing that pipeline. We’ve set up strong forecasting tools that help us manage the pain points in delivery three months earlier than they used to be. So they just don’t become a problem. We can see actually that we don’t spend a whole lot of time stressing about rights of way and priorities now because we have a strong handle on it.”

Balboa is revisiting automation solutions currently to build further capability into the business, and has stood up an AI squad to begin experimenting with artificial intelligence solutions.

Keeping the creative juices flowing

Of course it’s not all about operational improvement. Avoiding staleness in creative is one of the whopper potential pitfalls of an in-house agency working on the same brands day in, day out. For Nearhos it’s something to watch out for, but less worrying given the variety of work at Balboa’s disposal.

“We’ve got sport, entertainment, partnerships with all the other streaming businesses and with free-to-air. We’re in this really unusual position of touching creative and working with people from all over the category as an aggregator. We’re getting so much exposure,” he says, pointing to app partnerships like Disney, Netflix and Prime as examples. “There’s enormous variety – 50-plus sports alone – and that creates a lot of satisfaction for creators to work on exciting stuff. But it’s also exciting to take on third-party work. The team working on ad sales love working with McDonald’s and those other brands.

“I think it's really important for in-house teams to feel confident about themselves and not be seen as the B team, because they're not. We've got folks here so passionate about sport entertainment that we’re absolutely the number one place they want to work.”

For Nearhos, another string to the bow is hiring deliberately from inside and outside the category.

“With our brand design team, we've got four – some of the best team from Interbrand here. There are some really strong skills, people from previous agencies, as well as long term Foxtel who really know the category. It's important to mix those skills up,” he says. “And we do it end-to-end: You’ll be able to work on brand strategy through identity and design, campaign concepting all the way to production and getting it out the door. Here you do see the whole value chain of creative.”

Measurement plays a critical role here, and Nearhos notes plenty of pre-testing on major campaigns plus being close to campaign and business outcomes as a part of the core process and measurement at Balboa. Customer metrics, revenue metrics, acquisition and retention are all on the accountability list.

“I would say the creatives here are more connected to those business outcomes than I’ve seen in many external agencies,” Nearhos claims. “They’re very creative but they’re very commercial. You’ve got to manage it, and you’ve got to be accountable for the work.”

In Nearhos’ view, every brand should have some kind of in-house agency including in-house design, static digital capability and teams that can “churn out the high-volume stuff”. It’s just more efficient, he argues.

“But we’ve deliberately made the decision to be full service, end-to-end, multi-channel and not just cover our own assets but also big paid media assets.”

As it’s broadened the scope to now go external, the area Balboa has had to build muscle is arguably more around the traditional agency tasks such as writing new business and managing profitability.

“But some of us have done some time in agency land and we’re confident we can do that,” Nearhos concludes. “There are not many organisations that have the scale of an in-house agency that is like a traditional agency. But I think we’re among these and there are some around like us who can rival them.”