Agency in-housing has been a hot topic across the industry for a few years now, and the pandemic could accelerate the trend according to new research from the World Federation of Advertisers.
The report, Global Trends in Creative In-Housing, completed with consulting firm Observatory International, found that 57% of multinational marketers have an in-house agency, and another 17% are considering it. Just 4% previously had an in-house agency that has been discontinued.
“The reason why in-housing is such a hot topic is because the changing nature of the communications ecosystem necessitates that brands investigate new ways of operating,” said Observatory International senior consultant Rob Foster in the report introduction.
“Changing consumer behaviours, the proliferation of touchpoints and the corresponding increase in creative assets required, the need for smarter, data-led thinking and for mass personali[z]ation at scale all mean that existing client-agency operating models are being reviewed and, where necessary, changed.”
Another indication of the growing trend is that three-quarters of in-house operations were established in the past five years, and 82% of respondents said that workloads for in-house teams have increased in the last year.
The report is based on a survey of just 53 marketers, and is skewed toward big, multinational businesses. The respondents are global leaders with budgets representing $83 billion in global ad spend, meaning they have a big impact on the agency sector and the kind of clout that turns talk and theory into widespread action.
In-housing can include a variety of different services, but falls roughly into four categories: strategy, media (planning and buying), traditional creative and digital creative.
The greatest interest has been in digital creative, as brands endeavour to meet the rising demands for data-driven digital assets. Almost all (94%) have in-house digital creative capabilities, compared to about half who have media planning and buying in-house.
“Quicker access to digital content, and in greater volumes, was a common theme across the respondent base, particularly for those who were also in-housing digital capabilities,” wrote the authors. “Being able to meet the creative demands of digital platforms and feed their algorithms in real-time meant that media and creative aligned better to drive mutual benefits.”
Specifically, video production, email and eCRM, digital collateral and social media were the most cited creative being handled in-house.
As for the impact of the pandemic, the WFA said that “anecdotal reports” from respondents revealed that they have not cut their in-house agencies. “In some cases quite the reverse” it stated.
The report authors suggest that’s because some of the underlying motivations for taking more work in-house are being amplified by the pandemic.
“The COVID-19 global pandemic is perhaps the biggest catalyst for industry change since the arrival of the internet, affecting all companies and consumers alike,” they wrote. “It has exacerbated many of the challenges that have already led brands to consider in-housing resources – the need for greater agility and speed, stronger brand identity, more efficient working processes and reduced costs.”
The report stresses there is no one right model for any marketer, and covers a wide range of issues and topics about the possible implications for taking more agency work in-house:
- Just 14% of respondents cited talent recruitment as a major in-housing challenge.
- Turnover was just 9%, “considerably less than the agency landscape average,” wrote the authors, though they noted the low number could be because so many in-house staff are still new to the job and might be enjoying a “honeymoon period.”
- 69% of respondents said they realized costs savings of at least 6% in the last year because of in-housing some creative.
- 48% saw savings of more than 20%.
- 5% said in-housing creative did not reduce any costs.
Internal and external
- 95% of respondents said they still work with external agencies.
- While in-house creative workloads had increased, only 37% of creative work was being done by in-house teams.
- 38% allow internal and external agencies to pitch against each other, but…
- 43% said they brief in-house agencies differently than external partners.
“[T]here are a wide range of factors to be considered before embarking in an in-housing journey,” said Foster. “Ultimately, it is not just as simple as hiring some people directly, but instead is a major operational change that impacts company culture, ways of working, technology, agency relationships and cost models.”