The number of marketers with in-house agency capabilities has reached an all-time high, according to new research from the Association of National Advertisers.
“In-house agencies should no longer be considered a ‘trend,'” the study stated. “They have become firmly entrenched as part of the holistic marketing ecosystem and are now a ‘mainstay.'”
The ANA has been conducting research into in-house agencies every five years since 2008. This year’s findings are based on responses from 162 people, 65% of whom are senior marketers, and 53% who have more than 20 years of experience working in marketing and advertising. In addition, 42% of respondents worked at organizations with a media budget of $100 million or more.
According to this year’s survey, which was conducted in February and March, 82% of respondents report having an in-house agency, up from 78% in 2018, and from 42% when the study was first conducted 15 years ago.
While respondents overwhelmingly cited cost efficiencies as the leading benefit of an in-house agency, better knowledge of brands, institutional knowledge and dedicated staff were among the other reasons.
Clients use in-house agencies for a variety of services, with email topping the list, followed closely by social media. More than half (54%) of respondents said that media planning and/or buying services are handled in-house, with is consistent with previous years.
Nearly one-third (32%) of clients say they have in-house programmatic capabilities, which is also consistent with the previous study. “That suggests that the initial push among early adapters to bring programmatic capabilities in-house may have peaked,” said the ANA. Among the benefits cited by respondents: greater control, lower cost, greater transparency, and faster turnaround time.
The number of clients who are satisfied with their in-house agency has also risen, with 87% of respondents saying they are satisfied, and 24% saying they are “completely satisfied.” Both metrics increased from 2018.
It’s not all doom and gloom for traditional agencies, however, with 92% of respondents indicating that they continue to work with an external partner. Those respondents said that an average of 61% of the work done for their company is done in-house.
When asked for reasons why they chose to hand work to external agencies, clients said that it’s either because the in-house agency is too busy, or because they possess capabilities that don’t exist internally. Among other reasons, clients used language such as “large tentpole,” “big ideas” and “big marquee campaigns” as work they chose to delegate to external partners.
“This report definitively shows that in-house agencies have become a firmly entrenched part of the holistic marketing ecosystem and are now a mainstay among a majority of marketers,” said ANA CEO Bob Liodice, in a statement. “Agencies still play an important role for marketers, witnessed by the fact that 92% of respondents still use them. But the growth of in-house capabilities has clearly changed the client/agency relationship over the past 15 years.”
Not surprisingly, cost was among the most common responses to the question “What can external agencies do to limit the shift of work to in-house agencies?,” cited by approximately 40% of respondents. Knowledge of the business, and speed/ nimbleness were also cited, which the ANA said is “fairly consistent” with the cited benefits of in-house agencies.
Among the “more thoughtful” responses to the question identified by the ANA: “Being on the forefront of new channels and/or possessing emerging skills will continue to set our external agencies apart,” and “continue to focus on top-tier creative work and complex media problems that are too hard to bring in-house.”
Among the biggest challenges for clients with in-house agencies are managing increased workflow; scaling efficiently/managing resources, and project prioritization. Respondents in the 2018 survey also cited those as the biggest challenges.
Creative services for traditional media, such as collateral/promotional materials, internal company communications, followed by creative services for digital media, such as email, social media, website development/design, are generally the “point-of-entry” for in-house agencies said the study, with media regarded as “the final frontier.”
While 54% of in-house agencies handle some media planning/buying services—consistent with the 2018 and 2013 studies—that’s markedly lower than the 90% of respondents who handle at least some creative in-house. “Those who have considered bringing media in-house but have not yet done so told us in qualitative discussions that is because media is ‘too complex.'” the study said.
The complete study can be found here.
