Disintermediation of Traditional Agencies

September 13, 2013

By Bill Duggan

Dictionary.com defines disintermediate as: “to attempt to do away with intermediary entities between two primary market forces; to eliminate the middleman.” ANA has released a new report, “The Rise of the In-House Agency,” and traditional ad agencies need to take notice of the findings, or risk disintermediation.

The current marketing environment, with its increasing emphasis on productivity, speed, and cost-effectiveness, lends itself well to in-house agencies. Furthermore, the increased use of newer media (digital, social, mobile) puts a premium on turnaround time/speed, accelerating the expansion and importance of in-house agencies.

In-house agencies are rising to play bigger, more sophisticated, and strategic roles. External agencies are being disintermediated to some degree by in-house agencies. A majority of respondents in our research say that they have not only moved established business that used to be handled by an external agency to their in-house agency, but have also assigned newer functions, like digital/social/mobile, to their in-house agency. Such disintermediation has already happened in production, as more marketers decouple production from their creative agencies. There will be even greater disintermediation if the penetration and stature of in-house agencies continues to grow.

External agencies need to take notice, as the growth of in-house agencies may indeed be a warning sign that marketers are questioning the role of traditional shops. As the traditional agency marketplace continues to evolve, such agencies must reassess and redefine the value proposition they provide to clients. The rise of in-house agencies has great benefits to client-side marketers, and agencies must now give more consideration to how this affects them.

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