In-housing has been a consistently growing trend with brands, but according to a new study by the Association of National Advertisers, that trend is here to stay. The study found that 82% of ANA members reported that they now have an in-house agency, compared to 78% in 2018.
The study, “The Continued Rise of the In-House Agency: 2023 Edition,” is conducted every five years. In 2013, the study revealed 58% of respondents indicated they had in-house advertising capabilities, while in 2008 the figure was 42 percent.
The report defined “in-house agency” as “a department, group, or person that has responsibilities that typically are performed by an external advertising or other MarCom agency” and did not include internal PR resources. The survey was conducted in February and March of 2023, with 162 respondents participating.
“This report definitively shows that in-house agencies have become a firmly entrenched part of the holistic marketing ecosystem and are now a mainstay among a majority of marketers,” said ANA CEO Bob Liodice in a statement. “Agencies still play an important role for marketers, witnessed by the fact that 92% of respondents still use them. But the growth of in-house capabilities has clearly changed the client/agency relationship over the past 15 years.”
88% of respondents indicated their in-house shops’ workload increased in the past year, including 67% who said the workload had increased “a lot.” In the 2018 survey, 90% of respondents reported increased workload.
Respondents also said the single primary benefit of an in-house agency was cost efficiency. Additional benefits included better knowledge of brands, institutional knowledge and dedicated staff. Those benefits were consistent with 2018 numbers.
92% of respondents said they also work with external agencies, stating the work goes to those agencies primarily for bandwidth/capacity reasons, for example, the in-house agency is too busy, or for capabilities that an external agency has that do not exist internally.
In addition, over the past three years, 65% of respondents have moved some established business that used to be handled by their external agencies to their in-house agency. Services most cited in those moves were: creative services for digital media, including social media, search and email; creative services for traditional media, including print collateral, direct mail, internal communications, out-of-home and radio; media services, including social media and search and media strategy.
The top KPI used to assess the effectiveness of in-house agencies is cost savings, but it decreased in importance from 2018 to 2023 (69% to 62%). The KPI of business performance increased significantly in importance from 2018 to 2023 (45% to 59%).
The biggest challenges for in-house agencies are related to managing growth, including managing workflow, scaling efficiently/managing resources, and project prioritization. Those were also the biggest challenges in 2018.
Talent is also key. Just like external agencies, the quality of talent will drive the success of in-house agencies.