In a recent report published by the Association of National Advertisers, the number of advertisers with in-house agencies has risen from 42 percent in 2008 to 58 percent in 2018. Another study, courtesy of in-house agency trade group, claimed the 2018 figure was closer to 64 percent.
Cost savings and speed to market were the two initial drivers of growth for in-house agencies, especially with the burgeoning need to produce an increasing number of digital executions across a variety of uses and channels. Internal insight — i.e., more dedicated knowledge of the brand and the business — has also played into the proliferation of in-house setups. Plus, today’s stronger economy has allowed businesses more scope to hire internally and increase head count instead of relying on cost-cutting measures and outsourcing.
While some companies have combined the best of both worlds by relying on agencies for certain deliverables and in-house resources for others, small consultancies and in-house advertisers are benefiting from lower trust levels between advertisers and traditional big agencies. According to the Global Media Transparency Survey, low trust in agencies has risen from 36 percent in 2016 to 45 percent in 2018. A combination of issues is responsible, ranging from a lack of transparency to the continual exodus of senior talent because of cost-cutting measures.
Consequently, where should companies turn for their advertising needs: in-house talent or an outside agency?
One Without the Other
Companies are building in-house agencies across verticals, including consumer packaged goods (Coca-Cola and Clorox), retail (Target), beauty (Revlon), technology (Apple, Verizon, and AT&T), and financial services (SEI Investments).
Those efforts aren’t always successful, though. Intel, for example, decided to eliminate its internal resources during a recent executive switch as it shifted from a focus on consumers to marketing to other businesses. Intel is bucking trends, but it might also indicate a significant need for companies to evaluate whether in-house agencies are the best option.
When determining whether to set up an in-house operation versus hiring an agency, CEOs should consider the following aspects:
- Consider your company’s most pressing needs.
Do you need a more objective perspective on a solution that can be cross-fertilized by experience with other brands or sectors? Then hire an external agency.
If you need a team that knows your company from the inside out, however, it’s much better to hire an internal team. Even then, you must determine what roles your company needs. If your organization needs packaging and point-of-sale solutions, don’t hire experts in video production. If you need digital solutions, don’t hire a team of high-level TV professionals — you’ll end up with a group of disgruntled creatives. Identify the gaps in your company, and find a great leader who can establish the correct infrastructure, culture, process, and strategy.
- Decide how much control you’re willing to give.
External agencies can tap into their own tools and collective knowledge to provide added value, but you still need them to pitch their ideas to you. With an in-house team, you can save money and move quickly as long as you allow it to move forward with projects without unintentional roadblocks.
Don’t make an in-house team pitch for every project. The effort wasted by pitching and navigating internal politics will only cost you time and money. If you’re comfortable loosening the reins and giving up some creative control in exchange for faster results, an in-house team may be the right route. On the other hand, an external agency may be the right choice if you want a creative team that will run its ideas past you before executing.
- Figure out which solution will best fit your needs.
Determine how an internal agency can serve your business best or whether a hybrid approach might be better. Developing an internal team isn’t an easy task — companies must consider recruitment, training, and other setup costs.
External agencies thrive on creative talent, and great creatives tend to breed great creatives. The key to a successful in-house agency is establishing the right parameters — culture, process, and a focus on the creative solution.
Countless companies are debating whether they should hire an external agency or build an in-house team. Beyond time and money considerations, however, companies should weigh whether a hybrid model might be best for business. These three factors can help you make a decision so that your company can reach the right audience in exactly the right way — regardless of whether it’s via internal or external avenues.
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