The Rise of the In-House Agency
September 5, 2013
By Bill Duggan, Group EVP, ANA
ANA has released a new report, “The Rise of the In-House Agency,” and the findings are most interesting. Highlights:
The penetration of in-house agencies has increased 16 percentage points, to 58 percent, from our last survey in 2008. Also, there has been an increase in the number of employees on staff at in-house agencies.
- These increases are, in part, a reflection of the economic environment in which corporations have reduced budgets and are being challenged to do more with less. Moving the agency in-house — or increasing the role of an existing in-house agency — can help reduce costs.
- The growth of digital/social/mobile and the need for quicker turnaround for those media has played a role in the increased penetration and responsibilities of in-house agencies.
The services handled by in-house agencies are varied.
- The most commonly handled service by virtually all the in-house agencies surveyed is creative for collateral/promotional materials. Email, tradeshow/event materials, and direct mail are also widely serviced by in-house agencies.
- Half of all in-house agencies handle some level of media planning and/or buying.
- Newer media — specifically, social media, online display advertising, and search engine marketing — rank high on the list of media services handled in-house. In fact, when asked an open-ended question about the biggest changes in their in-house agencies in the past year, a significant number of responses centered around newer media.
In-house offer key advantages and appear to be growing in stature:
- Cost efficiencies are still the most often mentioned advantage of in-house agencies, although the percentage of respondents naming costs as the primary advantage has declined significantly since the 2008 survey.
- While quicker turnaround time is also a major benefit, other factors such as institutional knowledge and having a dedicated team have grown in importance since 2008. This indicates that in-house agencies are increasingly more sophisticated and strategic, not just “fast and cheap.”
Traditional agencies are being disintermediated to some degree by in-house agencies. A majority of survey respondents say that:
- They have moved established business that used to be handled by an external agency to their in-house agency.
- They have assigned newer functions, like digital/social/mobile, to their in-house agency rather than to an external agency.
The full report is available onthe ANA website.
Comments 1 comment(s)
Thomas Cunniff September 5, 2013 6:19pm ET
Bill, this is a terrific -- and timely study.
I worked for an in-house agency for a decade. When people asked if that was smart I always said "depending how you look at it, we're either 50 years behind the times or about 5 years ahead of it." A few thoughts...
1) Interesting that data is ranked so low as a reason to do this. I predict within 5 years this will be in the top 3. Leveraging in-house CRM data in combination with external data sources as a way to reach audiences and obtain consumer insight will soon be common practice.
2) The relentless fragmentation of audiences and expansion of devices means more creative has to be produced faster than ever. It's difficult for marketers to pay more, and it's impossible to ask agencies to accept less. In-house agencies offer speed, flexibility, and lower cost. I expect further growth in this area, as well as a growing reliance on machine-generated (and/or heavily machine-assisted) creative work. Narrative Science already publishes fully computer-created articles in Forbes. Soon we'll see tests of entirely computer-created ads, and they will be better than most people might think.
3) I think the inexorable rise of programmatic media buying and the rise of in-house agencies will be mutually supporting trends. The challenge for external agencies will be to prove that they can attract better talent and can routinely offer better solutions. The best agencies will be able to do this and will thrive. But I expect that many weaker agencies will struggle.
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