Large global companies are rapidly expanding the scale of in-house creative agencies, particularly for digital content, according to research by the World Federation of Advertisers (WFA) and management consultancy The Observatory International.
Three out of four in-house units have been set up in the last five years and in-house teams are attracting more work, with 82% saying workloads increased in the last year.
Some look to external agencies for big, strategic ideas development, with regular production work done in-house.
But others have the reverse approach.
Almost 40% said that they allowed both in-house and external agencies to pitch against each other for projects to drive the best possible responses.
The study, Global Trends in Creative In-Housing, is based on responses from 53 advertisers with an annual global spend of about $US83 billion.
Respondents report that moving creative work in-house is delivering cost efficiencies (greater than 30% in some), better integration (64%) and increased brand and business knowledge (59%).
More than half (54%) also reported that in-house teams had quicker and more agile processes.
The report found that out of the multinational companies that have an in-house agency, almost all (94%) have in-house creative capabilities for digital content. This compares with around half who have in-house media planning and buying capabilities.
The majority of creative resources are based around a centralised studio at HQ with 50% adopting this structure. Almost a quarter (23%) reported a decentralised structure and 15% had regional teams.
However, almost all (95%) continue to work with external agencies. Among this group about 37% of creative output now comes from the in-house team.
Despite the widespread assumption that advertisers could struggle to attract high quality talent, respondents reported an average staff turnover of just 9%.
Most of these teams (74%) have been set up in the last five years, so it may be that their relative youth contributes to this solid performance.
“What this survey highlights is the need for clearly defined roles and responsibilities as well as a clarity over scope of work for each agency, in-house and external,” says Stephan Loerke, CEO at the WFA.
“Having an imbalance in working processes creates problems and challenges that could mean that neither resource is used to maximum capability.”
Other key findings:
- Overall satisfaction is high: 82% are either satisfied or completely satisfied with in-house output. The top KPI used to assess the effectiveness of in-house agencies was quality of output (81%), followed by cost savings (52%) and speed to market (38%).
- Managing the process of creative: The top challenges for in-house teams are cited as managing workflow (62%), project prioritisation (52%) and the need for expanding capabilities and skillsets (48%).
- Digital and Video dominates outputs: The core creative services being handled in-house are video production, video, email/eCRM, collateral such as e-brochures and sales kits and social media, all of which were found at 73% of respondents. Display (65%), website development and corporate communications (both 62%) were next on the list.
- In-house creative teams vary widely in size: 57% of respondents had 50 or fewer people in total across all of their in-house creative agencies, whereas 24% had over 100 people.
Some reported managing the relationship between their external and in-house creative teams as a challenge.
One problem was that 43% said they briefed in-house agencies differently to the external ones.
Half (52%) admitted that their in-house agencies were assessed by different KPIs.
“In-housing creative resource is proving to be a success for brands who have undertaken the necessary operational reviews and have built a resource that is designed to complement their external agency model and meet objectives specific to their business,” says Rob Foster, senior consultant at The Observatory International.
“That isn’t to say that it is suitable for every company, and there are a wide range of factors to be considered before embarking in an in-housing journey.
“Ultimately, it is not just as simple as hiring some people directly, but instead is a major operational change that impacts company culture, ways of working, technology, agency relationships and cost models.”
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