In-house agency penetration is growing “dramatically,” says the ANA in a new report. Some 78% of client-side marketers who are members of the ANA report having an in-house agency this year, almost doubling the rate (42%) from a decade ago. And just 12% of respondents both lack such an agency and have no interest in one, per the report.
Agencies themselves have noted this trend. In a report released last year by the Society of Digital Agencies (SoDA), 6 in 10 said that the in-sourcing of digital marketing work is having an impact on their business. More recently, 30% of marketers surveyed by Advertiser Perceptions agreed that they’re more likely to bring their ad planning and buying in-house as a result of innovations in advertising technology.
What Are The Top Benefits of Going In-House?
For marketers who have an in-house agency, there are two clear benefits: cost efficiencies and better knowledge of brands, each cited by 83% of respondents.
Comments included in the report note that cost efficiencies “are not the silver bullet,” as external agencies are not chosen on that basis alone. Even so, cost efficiencies emerge as the primary benefit of having an in-house agency for a plurality of respondents. And it’s telling that the top KPI used to measure the effectiveness of in-house agencies is cost saving, by more than two-thirds (69%) of respondents.
It makes sense that the move to in-house is a response to cost concerns, as research has shown that cost is far and away the leading challenge faced by enterprises when working with external marketing agencies. Cost is also cited in separate research as the leading reason why clients put agencies up for review.
Besides cost, there are a range of perceived benefits afforded by in-house agencies, per the ANA’s study. Respondents with such a set-up also report institutional knowledge (73%), dedicated staff (73%), speed, nimbleness (64%) and greater control (58%) as being among the benefits provided.
Which Services Are Being Moved and/or Performed In-House?
One measure of the in-house agency trend’s impact on external agencies? Seven in 10 respondents say they’ve moved established business that used to be handled by an external agency to their in-house agency. That’s up from 56% who reported having done so in a similar survey conducted in 2013.
The strategic service most commonly moved is creative, by 42%. Others have moved marketing/product (28%), while fewer have moved areas such as media buying (17%) and programmatic (17%). The list of strategic services performed by in-house agencies generally follows this order of hierarchy, led by creative and with media and programmatic further down the list.
This next section contains brief highlights of the specific services handled by in-house agencies and those moved from external to in-house agencies.
Creative Services for Traditional Media
- Most Commonly Handled In-House: Collateral/promotional materials; Videos for internal use.
- Most Commonly Moved From External Agency: Brand identity; Videos for internal use.
- Top-Perceived In-House Benefit: Creative expertise.
- Percentage Satisfied with In-House: 81%.
Creative Services for Digital Media
- Most Commonly Handled In-House: Email; Social media.
- Most Commonly Moved From External Agency: Social media; Mobile display.
- Top-Perceived In-House Benefit: Speed, nimbleness.
- Percentage Satisfied with In-House: 79%.
Media Planning/Buying Services
- Most Commonly Handled In-House: Social media; Search engine marketing.
- Most Commonly Moved From External Agency: Programmatic; Social media.
- Top-Perceived In-House Benefit: Cost savings/efficiencies.
- Percentage Satisfied with In-House: 69%.
- Most Commonly Handled In-House: Content marketing.
- Most Commonly Moved From External Agency: Content marketing.
About the Data: The results are based on 412 respondents who are ANA members and client-side marketers (i.e. not agencies or media companies).