Ten years ago, I partnered closely with the In-House Agency Forum (IHAF) and Association of National Advertisers (ANA) to develop a survey and interpret results on the rise of the internal agency. The study revealed the incidence of in-house agencies among major corporations, the services those teams provide, their financials and operating practices, and the advantages and disadvantages of the model.
When the findings were released, they were met with a mix of surprise and predictability. Surprise that the penetration of internal agencies at the time was 42%—higher than many marketing insiders expected. Predictability in that the top two advantages cited for having an in-house agency were cost and speed—reinforcing the fast-and-cheap stereotype that has long stifled the model.
Fast forward to today and a lot has changed.
Fielded in partnership with Forrester Research, IHAF’s 2018 study (recently featured in the Wall Street Journal) reveals that in-house agencies have grown in both penetration and reputation. Today, 64% of corporations have an in-house agency—an increase of 52% from a decade ago. And while cost efficiency and speed to market remain as hallmarks, the top two advantages of having an internal agency are knowledge of the brand and knowledge of the business.
With the increased appetite for insourcing among corporate marketers, industry influencers and the advertising trade press have been quick to set off alarm bells regarding the possible disintermediation of traditional agencies. This has bred acrimony between external and internal resources, resulting in contentious debates regarding the caliber of talent in-house agencies have the potential to attract.
Talent is a critical component of the performance of any agency, regardless of its organizational form. In 2008, the ANA reported a lack of strategic depth and limitations on fresh thinking as in-house agency handicaps. This year’s IHAF study reveals something similar, with recruitment of talent and staying abreast of trends ranked as leading disadvantages. Corporate marketers also cited digital know-how and creative expertise as lacking.
So, where do we go from here? We follow the money.
You see, as much as in-house agencies shun the label “fast and cheap,” many simultaneously wear it as a badge of honor. They pride themselves on the sizable savings they deliver to their parent corporations in comparing the cost for them to support the business versus the cost to outsource the same.
To evolve internal agencies that have mastery of the business, command of the brand and a high degree of digital and creative prowess, C-suite executives need to stop looking at the in-house model as a way to save and start looking at it as a corporate strategy. They need to make deliberate, considered investments in building teams that disprove the stereotype by hiring the best, brightest, most talented people money can buy. They’re out there and not all of them want to work for an external agency.
IHAF’s 2018 report contains a host of data—not to mention first-person narratives from those in the trenches, who are leading and influencing the advancement of today’s in-house teams. As you dwell on the charts and graphs, remember that the processes, platforms and pricing models you choose are second to the people that comprise your organization. Invest in people who will make your in-house agency soar. Recruit top talent. Compensate them competitively. Clear the obstacles that get in their way. And don’t saddle them with the bottom line. Then, let’s see what story the data tells a few years from now.