Large global companies are rapidly expanding the scale of their in-house creative agencies, particularly for digital content, according to recent study titled "Global Trends in Creative In-Housing", done by the World Federation of Advertising (WFA) and global consultancy The Observatory International. Based on responses from 53 advertisers with an approximate annual global spend of US$83 billion, the study found that three out of four in-house agencies have been set up in the last five years. It is also added that in-house teams are attracting more work, with 82% saying workloads are increasing in the last year.
Nonetheless, while companies are turning towards setting their own in-house agencies, almost all respondents (95%) of the study said they continue to work with external agencies. When both in-house and external agencies are involved, managing cross-agency relationships can get tricky, respondents of the WFA study said.
A potential challenge is the disconnection when it comes to cross-agency relationship between in-house and external agencies.
The study found that a number of respondents said that either there is no relationship or that competition between the two can be evident. Additionally, almost 40% of the respondents said that they allowed both in-house and external agencies to pitch against each other for projects to drive the best possible responses.
One problem was that 43% said they briefed in-house agencies differently to the external ones, and 52% admitted that their in-house agencies were assessed by different KPIs.
The job scopes are also not well-defined at times. Some companies look to external agencies for big, strategic ideas development, with regular production work done in-house, while others have the reverse approach. While these factors could put a strain in the relationships between the two teams, it often falls to the marketing team to manage both sides to a point of collaboration, and this navigation can be a drain on time and resource. Outlining clear expectations, roles and responsibilities for all parties will go some way to easing any tensions or potential breakdowns in process
Stephan Loerke, CEO at the WFA, said the study highlights the need for clearly defined roles and responsibilities as well as a clarity over scope of work for each agency, in-house and external. "Having an imbalance in working processes creates problems and challenges that could mean that neither resource is used to maximum capability," Loerke added.
While the study showed that in-house creative resource may be proving to be a success for brands, Rob Foster, senior consultant at The Observatory International, cautioned that this strategy may not be suitable for every company. "There are a wide range of factors to be considered before embarking in an in-housing journey. Ultimately, it is not just as simple as hiring some people directly, but instead is a major operational change that impacts company culture, ways of working, technology, agency relationships and cost models," he said.
Respondents said that moving creative work in-house delivers cost efficiencies (greater than 30% in some instances), with 64% citing better integration and 59% citing increased brand and business knowledge as other benefits. Additionally, 55% of respondents also reported that in-house teams had quicker and more agile processes.
The overall satisfaction is high when it comes to in-house teams, with 82% of respondents stating that they are either satisfied or completely satisfied with the output of their in-house teams. The top KPI used to assess the effectiveness of in-house agencies was quality of output (81%), followed by cost savings (52%) and speed to market (38%).
Anecdotal reports also suggest that COVID-19 has not led to cut-backs in these agencies, instead it is "perhaps the biggest catalyst" for industry change, exacerbating many challenges that led brands to consider in-housing resources. These challenges are mainly: the need for greater agility and speed, stronger brand identity, more efficient working processes and reduced costs. While COVID-19 is forcing many businesses to review their operations, some with existing in-house teams are reporting an increase in demand for their services, and expect their in-house agencies to grow in the coming years as a result.
Strong focus on digital
When it comes to in-house agencies' capabilities, digital content is a strong focus. Out of the multinational companies surveyed that have an in-house agency, 94% of them have in-house creative capabilities for digital content.
In comparison, around half of them have in-house media planning and buying capabilities.
According to the study, the increase in in-house digital services is a relatively recent trend. Almost half (41%) of respondents said that their in-house agency had taken on new services within the last three years, the majority of which are digitally-focused. Some of the digital services include content production, social management and reporting, programmatic buying and influencer relationship management.
The study also weighed the pros and cons of having an in-house digital team. Besides saving cost on agency fees, companies can have tighter data ownership and greater control of the accounts if the work is done in-house. They can also ensure a dedicated and consistent team of staff.
The downside, however, is that the team has reduced industry knowledge and less specialised skills, as compared to external agencies. In-house teams also lack an outside perspective, and may have a siloed view of performance.
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