Intel—which has become an industry poster child for running a successful in-house agency—is gutting its internal creative group, Agency Inside, amid an executive shuffle and change in strategy.
The in-house shop, which employed roughly 90 people, has begun laying off staffers but will keep around 30 people, according to a person familiar with the matter, who described the situation as Agency Inside "effectively shutting down." The move comes as the company is poised to put fewer resources into consumer-facing marketing and focus more on B2B.
Agency Inside—a play off its old "Intel Inside" tagline—was established in 2014 under the leadership of then-chief marketing officer Steve Fund, who had deployed a similar strategy at Staples. Fund was tasked with transforming 50-year-old Intel from a dusty B2B chipmaker to a brand innovator familiar to many consumers. His efforts, which included high-profile Super Bowl spots touting new technology, largely met with success as Intel improved its rankings on lists like Interbrand's best global brands.
But Fund lost the CMO title earlier this year. He was assigned to handle "special projects for the company," the Oregonian reported in May. Fund's LinkedIn page shows his tenure at Intel ending in July.
Michelle Johnston Holthaus, senior VP and general manager for sales and marketing, was installed as interim CMO. Teresa Herd, Intel's global creative director, handled daily management of Agency Inside.
Herd, who will remain with the company, did not respond to a request for comment.
"As Intel's complex business continues to expand across more products and industries, we're recalibrating our marketing strategy to be more B2B and ecosystem-focused. As part of this shift in strategy, we've decided to reduce the capabilities and evolve the focus of our internal creative agency, Intel Agency Inside," the company said in a statement, noting that the needs of global technology companies are shifting. Intel said a subset of the Agency Inside team will remain. The company declined to comment on layoffs.
Under Herd's leadership, Agency Inside became one of the most talked about, and praised, internal shops in the industry. It was named Ad Age's In-house Agency of the Year in 2017; at the time, the department employed 90 people.
The group was responsible for a drone show at the Olympics earlier this year, a follow-up to a Super Bowl effort during Lady Gaga's halftime show in 2017. Intel also ran a 2017 Super Bowl commercial starring Tom Brady that touted its 360-degree replay technology. The Brady ad was handled by McGarryBowen, but Intel execs have touted the in-house shop's collaboration with external agencies.
Intel's decision to gut its in-house shop runs counter to the industry-wide trend of growth in the strategy. A recent report from the Association of National Advertisers found that 78 percent of marketers have some form of in-house agency, up from 58 percent in 2013.
Indeed, the ANA is hosting its first-ever conference on the subject in Orlando, Florida in March. Herd, who had worked with Fund at Staples, has spoken at numerous events, including a keynote presentation at the In-House Agency Forum's annual conference and awards show earlier this month, about how marketers can successfully incorporate an in-house shop into their advertising strategy. Herd is also scheduled to speak on Tuesday with Verizon's Warren Chase about creating an on-site agency at an event hosted by Campaign US.
Intel has had a host of leadership changes this year. The company's CEO Brian Krzanich resigned in June after admitting he had had a relationship with an employee, a violation of company policy. The chipmaker is currently searching for a permanent leader; former CFO Robert Swan was appointed interim CEO.
News that Intel had been pulling away from its internal agency was first reported by The Information on Thursday.
Contributing: Angela Doland