Growth of Internal Agencies
In news that’s surprising to no one, in-house agencies are on the rise. What is new, however, is just how much. The vast majority, or 78 percent, of members of the Association of National Advertisers have some form of in-house agency, according to a new report by the group, which surveyed 412 client-side marketers. And many of those marketers who don’t already have internal agencies are considering the strategy—of the 22 percent minority, eight percent said they are thinking about opening an in-house group.
It’s a sharp upward swing from the ANA’s most recent report on the topic, published in 2013, which found the numbers to be more evenly divided. At that time, just 58 percent of 203 marketers reported an in-house team.
Last year, 98 percent of internal creative teams said they will grow or stay the same size, up from 85 percent in 2016, according to the annual “In-House Creative Services Industry Report,” compiled by Cella. That’s a stark contrast to six years ago, when brands struggled to justify the existence of internal agencies, according to Cella, a management consulting firm.
A recent Instagram campaign for real estate firm Compass touted the bright lights and big city of New York with images of landmark buildings and noteworthy architecture. But the company wasn’t trying to lure prospective home buyers and sellers to enlist Compass’ services. Rather, the campaign targeted designers and data scientists to join the brand’s growing internal marketing team. Currently composed of around 120 staffers, the department is rapidly filling another 60 open positions, according to Matt Spangler, chief creative officer.
Rapid growth has left marketers grappling with how to structure their internal teams and balance relationships with external agencies. They’re also desperate to attract the top creative talent that years ago shunned such opportunities, trying to win them with flexible hours, job stability and promises of career development through specialized education and training programs.
“The biggest things on the minds of marketers is if [they’ve] hired the right people and how to make sure they’re talking to each other the right way,” says Lindsey Slaby, founder of Sunday Dinner, which consults with both brands and agencies. She says brands are trying to figure out how creative staffers communicate with other disciplines like performance marketing and so on to avoid silos. “The structure is a big thing,” she says.
Brands Betting Big on Internal Teams
While some marketers such as Intel and Progressive have long had successful internal agencies, others, like Verizon, which opened an in-house agency last year, are new to the strategy.
SoulCycle has also been expanding its internal capabilities with the hire of a creative director last year, bringing in Roxana Zegan, whose resume includes stints at fashion brand Coach and creative agency Droga5. The ANA report lists cost savings as one of the top benefits of in-house agenices. That is leading some marketers to move some functions in-house, even as they hire new shops.
Last week, amid the news that it had awarded lead creative duties to BBDO, Ford said it will expand its in-house marketing with 100 new positions dedicated to brand design, media tools, technologies and customer experience. That’s a big shift for the automaker, which had traditionally outsourced major marketing duties to WPP, which is remaining on Ford’s roster. Earlier this year, JC Penney awarded its creative business to Badger & Winters from McGarryBowen. While the retailer’s new agency is responsible for the overall brand platform, recent campaigns, such as a spring effort with Shaquille O’Neal, have been produced internally.
Marketers credit internal agencies with maintaining brand consistency and allowing for better control. Andrew McKechnie, chief creative officer at Verizon, said in a statement that the brand’s new agency helps “connect the dots when we think about our brand narrative and brand experience.”
Recruiting for Internal Agencies
Years ago, it was a challenge to convince top-notch creatives to join a marketer, but recent award-winning work from brands like Intel, which operates Agency Inside, and Spotify have helped improve the pitch. Jackie Jantos, VP of brand and creative at Spotify, says that the company’s recent campaigns, such as marketing tied to playlist RapCaviar, have softened talent’s hesitation to take the plunge with a brand, in contrast to a few years ago when hard-sell recruitment was a must. The music company has a marketing department of 80 staffers, 30 of whom are within the creative discipline.
“So far as you’re able to prove to the creative industry and the type of marketers that you want to bring in your door that you’re truly going to support the execution of audacious ideas, it’s incredible the number of people who want to work with you,” says Jantos. But she adds that it “takes time to build up trust with the creative community.”
Offering a few extra perks helps too. Recruiters say that young creative professionals, fresh out of school, are giving more consideration to going in-house than they ever did before. In addition to higher-caliber creative work, internal agencies have gotten wise to the office perks long afforded by ad shops—free snacks, a design-minded office interior with lots of collaborative space, and frequent group outings and activities.
Coupled with a more flexible work schedule and greater job stability than is suggested by some doom-and-gloom headlines about agencies, such perks go a long way in courting today’s college grads. Now the job listings between agencies and brands are more evenly divided, especially as younger creatives are more open to becoming part of a brand they identify with, says a recruiter. “Brands are creating that environment and culture that really sustains long-term employee happiness.”
With recent concerns over the direction of the economy in 2019 and desire for long-term stability, combined with the creative cultures being fostered on the corporate side, don’t be surprised if more creative talent migrates from traditional agencies to internal teams at brand marketers in the coming years.
The big question becomes, “Is your internal talent acquisition function up to the task of recruiting and retaining this type of talent?”. This is exactly what we do on behalf of our corporate clients, so let us know if you’d like to discuss your talent acquisition strategy. Talk soon!
UPDATE: Within the past few weeks, Intel has laid off all of the creative and production staffers at Agency Inside as it prepares to focus the in-house hub it launched about three years ago only on account services. The move comes, in large part, as a result of the departure of Intel CMO Steve Fund, who left the company in July. Fund was a big proponent of the in-house agency, particularly given the success that he experienced while at Staples.
All Due Credit: Special thanks to our friends at AdAge and Marketing Week for sharing some of their great content as well as AdWeek for the update on Intel.
