In a recent study conducted by the World Federation of Advertisers (WFA), in partnership with The Observatory International, significant insights into the landscape of in-house agencies have emerged, challenging earlier reports suggesting a decline in this model. The findings not only defied the notion of a slowdown but underscored a robust 16% rise in the prevalence of in-house agencies since 2020 among major multinational brands.
The study by WFA revealed that a substantial 66% of major multinational brands now accommodate in-house agencies, signifying a noteworthy increase from the figures recorded in 2020. Furthermore, an additional 21% of brands were actively considering the establishment of their own in-house agencies. The surge pointed to a growing trend among major players to internalize essential marketing functions.
A notable revelation from the study is the growing prominence of strategic capabilities within in-house agencies. A staggering 70% of respondents reported possessing strategic capabilities in-house, spanning crucial areas such as brand, creative, and media. This internalization of expertise not only reflected a maturation of in-house agencies but also underscored the increasing confidence major brands have in their ability to handle core marketing functions internally.
The study indicates that the trend toward in-house agencies is set to continue its upward trajectory. Over the next three years, 56% of respondents expressed their intention to move more digital production from external agencies to in-house operations.
One of the exceptional trends identified by the study is the anticipated growth in online planning and buying within in-house agencies. An overwhelming 83% of respondents expected to handle some social media buying in-house over the next three years, a significant increase from the current 37%. Similarly, 67% of respondents planned to add social media planning to their in-house capabilities up from the existing 48% even though 33% of respondents were planning to shift more offline production in-house, marking a dynamic shift in the balance of responsibilities between in-house and external partners.
Digital media planning and buying tasks also featured prominently in this anticipated growth, with 50% of respondents expressing the desire to take on these responsibilities internally. This shift highlighted the evolving nature of marketing channels and the strategic role in-house agencies play in navigating this landscape. The study revealed that despite having in-house capabilities, brands continue to engage with external agencies, particularly during periods of increased workload or when specialized skills are required.
Stephan Loerke, CEO of the WFA, emphasized the transformative impact of in-house agencies on brand communications. He stated, “The rise of the in-house agency is one of the big changes in the way big brands manage their communications needs over recent years.” Loerke attributed the trend not only to cost efficiencies but also to the ability of in-house operations to deliver faster response times and enhanced integration.
The agility of in-house agencies allows brands to respond more swiftly to changing market dynamics, aligning their communications strategies with real-time events and trends. This heightened responsiveness contributes to a more dynamic and adaptive approach to brand communications.
The study delved into the challenges associated with the proliferation of in-house agencies, shedding light on the evolving nature of concerns faced by brands. In 2020, managing workflow, project prioritization, and expanding capabilities and skill sets were the primary challenges. However, in 2023, the focus has shifted towards integration between internal and external resources and overall resource management.
Talent attraction and retention emerge as persistent challenges, with 20% of respondents highlighting these issues. While turnover remained low, the competitive landscape for top-tier talent in the marketing and creative industries presented an ongoing obstacle for brands looking to strengthen their in-house teams.
John Little, regional managing partner at The Observatory International, Sub-Saharan Africa Conclusively noted that given budget pressures and a desire for faster, more efficient asset delivery at a lower cost, the growth of in-house offerings continues unabated.
However, he emphasized the importance of effectiveness, cautioning businesses against merely producing content to meet expectations rather than addressing genuine needs and that It is key to ensure that in-house efforts are not wasted and do not become potentially detrimental to business objectives.
