Brands with in-house agencies are starting to prefer freelancers and non-traditional agencies, marketers revealed at Australia's first in-house agency summit.
Despite a hybrid model remaining dominant - with 78% of In-House Agency Council (IHAC) members using external agencies - more work is being done in-house.
In 2023, external agencies do only 38% of work for in-house agencies; this has decreased from 2021 when external agencies conducted 70% of work.
Jemma Downey, group GM commercial excellence at Asahi, said on stage that the rise of in-housing is because the CFO and CEO can see better efficiency and more control of output.
“A big driver for the volume increase is that the channel mix has changed significantly, certainly in the past few years with our investment strategy more focused on tech,” Downey said.
“We are doing a lot more in-house [for better] control and transparency of our costs, over what's getting delivered and what's going outside of the business.”
Jackie Nissen, head of digital product at YOUI, also identified technology cost-efficiencies as a driver of her increasing workload.
“Digital advancement is not slowing down what we do, it's probably making it more complex, particularly when you look at data privacy and a digital ecosystem that's in flux," Nissen said.
“Focusing in-house allows for true cost transparency, being able to tackle the data privacy issues by having control over and then creating efficiencies.
“That's why functions like marketing operations are so critical for us to do in-house, so we ensure we're focusing on the really big initiatives that are truly important in moving the needle.”
Despite the high increase of in-housing, external agencies are still needed.
YOUI’s team of 40 in-house agency still uses external agencies for ‘big bets’ and for work overflow.
“Whether it be a large brand reset, which we're undertaking at the moment, that's where you need external voices, you need to know that you're getting it right when you go market,” Nissen said.
“When we've got too much work and we need to produce in a timely manner then we'll also look to agencies, some of those using AI and other tools to also speed up our delivery.”
However at Asahi’s more mature in-house agency, 1House, which started in 2015 and has since grown to a team of 70, Downey believes freelancers and non-traditional agencies will become more important.
“Looking to the future I think the cumbersome, expensive retainer model is a thing of the past, because you can hire strategic and creative guns and other specialists in the market without having to go through an agency,” Downey said.
“That's what we do - we have a model based on a freelance pool.
“Looking at the partners that we need at the table, they're not necessarily the traditional creative, media agencies anymore.
“They are partners like Mutinex [marketing mix modelling toolkit] and Akcelo [brand experience and innovation company] so we don't have to hire 30 web developers and instead we can tap into an agency that actually delivers that kind of quality and that expertise needed.”
Guido Derkx, COO at Storyteq, said the rise of in-house agencies is because traditional agencies have no incentive to change.
“Introducing specific types of tooling like automation and AI are pretty much going against the traditional agency model," Derkx said.
“So if brands are looking for technology partners to bring them to the next level - as long as traditional agencies are not incentivized to do so they won’t.
“I think traditional agencies have been overvalued for many years and the market is balancing itself out.”
Moderator Nick Thomas, partner and chief strategy officer at -lution, also weighed in saying the baseline is moving.
“As the number of businesses that have in-house agencies grows, the quality of the work improves and the satisfaction improves the baseline of what you then expect by paying a higher price to your external agencies goes up," Thomas said
“And when the external agencies don't deliver upon that, that's when you see lower satisfaction with external agencies.
"This drives them to do more internally, because it's better than not getting the level of service that they could deliver through an in-house team.”
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