Survey Highlights Increasing In-house Agency Sophistication and Enhanced Output
In-house agencies continue to thrive as brands experience a remarkable 33% increase in complete satisfaction, reflecting their growing sophistication and improved output, according to a recent survey
Article Brief:
The latest survey data from the World Federation of Advertisers (WFA) and The Observatory International reveals that the percentage of brands considering establishing an in-house agency has increased to 21%, up from 17% in 2020.
An increasing number of marketers are looking to expand in-house operations, with over half planning to bring more digital production in-house in the next three years. Other areas such as offline work, data strategy, and data management and analytics are also expected to shift in this direction. The main drivers for in-housing are cost efficiency, increased agility, easier integration, and deeper brand knowledge, with a third of marketers reporting high satisfaction with their in-house agencies, indicating a significant improvement from 2020.
Article Insight:
The adoption of in-house agencies, a trend that has fluctuated as brand marketers attempt to keep up with rapid transformation, seems to be increasing once again. Many client-side shops are still in their early stages, with nearly three-quarters of those identified in the report being only one to five years old. However, the level of sophistication and volume of work these units take on could significantly expand, altering the industry dynamics with third-party marketing services providers. At the same time, the quality of in-house results is improving, with 86% of brands reporting overall satisfaction and 33% experiencing “complete satisfaction,” compared to 23% that said the same just three years ago.
The survey found that 70% of respondents believe that their in-house capabilities now have true strategic capabilities in brand strategy, creativity, and media - a five percentage-point increase from 2020. Marketers are aiming to enhance their in-house expertise in lucrative service areas such as data management and analytics, as they face pressure to navigate first-party data with the impending cookie deprecation in 2024. Additionally, there is a growing expectation that more social media buying will move in-house over the next three years, with 83% of companies polled predicting this shift. The WFA and The Observatory International findings are based on surveys of 45 multinational brand marketers representing an estimated $60 billion in annual ad spending.
Numerous influential marketers have emphasized the benefits of bringing their marketing efforts in-house after expressing frustration with cumbersome agency structures. For example, Procter & Gamble, one of the world's largest advertising spenders, claims to have saved tens of millions of dollars by taking control of media planning and purchasing, and investing in proprietary technology for segments like its fabric care business. However, in-housing can be costly, with 7% of survey respondents investing over $50 million annually in their internal agencies.
In-housing is often portrayed as a direct threat to outside agencies, even though both approaches often coexist, and integrating internal and external resources is one of the biggest challenges cited by brands this year. The way brands assess the success of in-house operations also differs from external partners, who are typically evaluated based on their effectiveness, according to the WFA and The Observatory International.
Generative artificial intelligence has the potential to disrupt the conversation around in-housing. This emerging technology offers the promise of helping marketers create a greater quantity of creative assets, such as images, video, and copy, at a faster pace while also assisting with data-driven and operational functions. However, as the use of this technology becomes more widespread, marketers need to prioritize quality to avoid alienating consumers and damaging their brand reputation.
Stuart Pocock, co-founder of The Observatory International, highlighted that the growing trend of in-house offerings is driven by budget constraints and the need for faster, more cost-effective asset delivery. While the benefits are significant when implemented correctly, Pocock also emphasized the importance of not simply producing content for the sake of meeting expectations, but rather ensuring that it fulfills a genuine need.
