The concept of in-house agencies has been a trending topic for several years now, but is the investment really worth it? According to recent study done by the World Federation of Advertising, three out of four in-house agencies have been set up in the last five years based on responses from 53 advertisers with an approximate annual global spend of US$83 billion. The study claimed that in-house teams are attracting more work, with 82% saying workloads are increasing in the last year.
Nonetheless, setting up an efficient in-house team has its challenges. According to a whitepaper done late last month by R3, not only does it take time, money, and resources to build the team, in-house agencies also require the active participation of other departments in the organisation, including the C-suite, to oversee. The whitepaper added that in order to gauge if a brand should set up an in-house agency, brands should ask themselves these seven questions:
1. What is the spectrum of control they want?
Since in-house agencies require quite a bit of time and resources, brands need to determine its level of commitment to in-housing before making a decision. Brands should figure out the “spectrum of control” they want to have, and determine if setting up an in-house agency is worth the effort. The five areas that brands should consider are its media budget, sensitivity of data, need for agility, diverse product portfolio, and target audience diversity.
2. What is the correct size?
When moving a complicated service such as media buying and paid search in-house, marketing teams that have more than 20 people are at an advantage in comparison to smaller teams. According to a survey done in October 2019, teams with more than 20 people are found to be more likely to adopt a hybrid model, which means that they will house the agency in their building alongside their marketing teams. However, there are services that are a bit easier to move in-house, such as social media, content and design, thus requiring less people and not necessarily needing a hybrid model. In this case, 50% of teams that have between six to 20 people have already moved these services in-house due to an easier and more effective transition, according to R3.
3. How can brands develop internal capability?
Brands also need to ensuring that in-house teams have the level of skill to keep it competitive. Internal staff are much closer to the brand in terms of resource and overall understanding of the business, and their ability to deliver under constraints are invaluable - particularly as teams are socially distanced. A brand insider would be armed with more internal tools and possess sufficient corporate solidarity to get the job done.
However, by not having access to a large pool of talent - as they might have with an integrated agency partner - brands with in-house teams risk playing it predictable and safe. The key to success in this area is to consider skill and talent development when deciding team roles, overall reporting structure, as well as team location.
4. What are the right skill sets?
R3's whitepaper also added that brands should keep in mind when identifying skill sets, the cost of outsourcing the same task to more qualified individuals in freelance or agency positions. The cost of onboarding, training, and ensuring that team members are “up to play” with the latest applications and innovation can get overlooked.
5. What technology does the brand need?
When setting up an in-house agency, it is essential to have a clear idea of what technology is needed to support the delivery of work, and the associated cost of integrating and maintaining new systems. This knowledge will help manage expectations of what the brand will get out of its in-house agency and how able its team will be to deliver the work.
6. What is the in-house agency budget for the brand?
In order to have effective resourcing, organisations must be diligent with their budgets when it comes to in-house agencies. Having adequate budget allocated to marketing initiatives will aid in having successful campaigns. For example, organisations which executed successful content marketing campaigns had 39% of the total marketing budget allocated to content marketing.
7. How will partnerships be managed?
In-house agencies typically partner with external agencies to complement their service offering, especially campaign strategy, creative strategy and design execution. While overall satisfaction is good and miscommunication has improved with in-house agencies, it was found that partners’ lack of brand knowledge has also increased by 15%.
R3 noted that beyond simply sharing the workload, there are other key reasons to further agency relationships, including keeping up with a dynamic business environment, integrated creative excellence, career development for the team, and efficient delivery. Leaders of the brand must also work to remove the fear of bringing in outside expertise and embrace the possibilities.
Benefits of in-house agencies
Setting up an in-house agencies may be daunting, but it also brings about benefits. Through its whitepaper, R3 found that the top six in-house agency services were content marketing, creative strategy, data analytics, media strategy, programmatic media, and social media. Much like the WFA report, R3's whitepaper also found that in-house agencies are "faster and more cost-efficient" when it comes to areas such as content marketing. They are also better able to feed the demand of multiple "always-on" channels, which varies from video assets and rich media through to product listing ads in search. In-house agencies also give brands creative control, and this is beneficial to brands as the speed of adapting to consumer interests or events could be the make or break factor of any marketing campaign. Additionally, in-house agencies allow brands to retain ownership of their data. Having an in-house team can ensure that there is a central source of data being used across all activity.
R3's whitepaper added that especially for direct-to-consumer brands, in-house agencies can allow brands more control of their media channels, becoming self-reliant on everything other than upper-funnel demand creation via mass media. In-house agencies are usually also tasked with social media duties, since social media platforms generally offer self-serve ad-buying tools that can be used with minimal spend. With such a low barrier to entry, marketers are able to test campaigns against particular audience segments using their in-house agencies, before deciding whether to invest more money to reach more people.
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