Fifth of brands considering setting up in-house agency

Two-thirds (66%) of brands now have in-house advertising agencies and a further 21% are considering establishing one, according to research by the World Federation of Advertisers. 

 

A report found the proportion of brands with in-house agencies had increased by 16% increase since the survey was last conducted in 2020.

 

The study, Global trends in agency in-housing: 2023 update, completed in partnership with management consultancy the Observatory International, was based on responses from 45 brands that spend a cumulative total of £47.45bn ($60bn) on global advertising annually. It found more major multinational companies were planning to establish in-house agencies, with 21% actively considering doing so. This is up from just 17% in 2020. 

 

Although cost-efficiency appears to remain the strongest motivation behind the growth in the in-house function – with 83% stating as much – other factors such as quicker and more agile processes (76%), better integration (59%) and increased brand knowledge (59%) are also driving adoption. 

 

The figures also show 70% of companies have strategic capabilities in-house, such as branding, creative or media, which is an increase from 65% in 2020.

 

In addition, over half (56%) shared that they expect to move more of their digital production from external agencies to in-house. 

 

All the brands included in the survey continue to work with external agencies, many of whom are still used to help deliver when in-house capacity is stretched.

 

Stephan Loerke, chief executive of the WFA, said: “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. 

 

“While cost has been an initial driver of the trend, successful operations are demonstrating that they can deliver significant additional benefits such as speed of response. Greater maturity of the sector is also giving brands more confidence to expand their operations both in terms of scale and capabilities.”

 

Stuart Pocock, co-founder of The Observatory International, added: “Given budget pressures and a desire for faster, more efficient delivery of assets at lower cost, it’s unsurprising that the growth of those developing in-house offerings continues unabated. The rationale is obvious and benefits are considerable when you get it right.” 

 

(This article first appeared on CampaignLive.co.uk)