Advertising Agencies' Future is Insourcing

Published
  • April 14, 2022 |
  • 7 Min Read

Like inflation, in-house marketers’ desire to create their own teams inevitably reemerges at the peak of every economy. This is especially true at the beginning of disruptive marketing cycles, which are one of few things that haven’t experienced shortages – entering the Metaverse; virtual influencers; data-compliant tools; disruptive turn-of-events such as the cookieless future and Facebook’s continued underperformance; the list goes on.

Your Trusted Advisor Can Help You With the Change

If an agency truly had their clients’ best interests at heart, it would recognize that hiring skill sets in-house would make it easier for them to execute and do the best work of their life, while simultaneously challenging employees to work smarter and deepening the relationship between agency-side and client-side C-suite executives. A 2018 report from the Association of National Advertisers found that approximately 78% of US companies were handling some degree of marketing functions internally through in-house agencies, representing a significant rise since 2013, which reported only 58% of companies. For an agency to be threatened by an in-house team and the new director that may accompany it is to acknowledge that the relationship between agency and client was not built on trust and would be unlikely to last long-term. What does this mean for the future? Companies should not only be able to enlist their agency to develop a new tagline or media plan pivot – but also assist with organizational restructuring. Just as senior agency leaders present a logo that was requested, they should be drawing an organizational chart and even hiring on the behalf of clients from both within their own agency and from the client-side space. Ultimately, this is what is best for both agency and client – yet the Western world continues to drag their feet. This hybrid agency model has existed in Asia for more than 20 years. What exactly does this look like? Some talent is completely deployed internally, while other client-side staff may be hired by recruiters of the agency but have absolutely no connection to the agency itself. In some organizations, agency owners and senior marketing leaders sit through interviews reminiscent of a pitch process review to source client-side talent and filter out the executioner versus the strategist. Just like in consulting firms, change management, strategic management, and management consulting are inherently built into advertising agencies for the C-suite of a marketer – it simply hasn’t been well marketed because it’s not the agencies’ bread-and-butter. 

Look for Strategists, Not Executioners

Since the late 2000s, the world has undergone one of the longest economic expansion periods – the 25 year expansion in Australia, the 14 year expansion in the U.S, the 30+ year revival in Asia, etc. The real defining feature of this period, however, has undoubtedly been the proliferation of digital – and with this overt technological innovation comes the need for advertising agencies to modernize their own traditional ways. What does this mean for the insourcing of digital marketing teams? That, instead of letting history repeat itself, in-house marketers need to seek out strategists, not executioners. Like the rest of the world, advertising agencies are not what they were in the 2000s – what were once responsible solely for execution in media and idea generation in creative have now become increasingly consultative entities and cross-industry drivers of innovation. Now, in a highly digitized world, continuing to hire executioners is borderline prehistoric and would ultimately mean a stagnation on the ability to execute on innovative platforms and advertising units. Although most companies that have begun engaging in insourcing efforts have focused on digital marketing activities, some major organizations such as Chobani, Pepsi, and Unilever have brought strategy or creative functions in-house, while Allergan, Land Rover, and Sprint have already established full-service internal creative groups. Google is no longer just search, it is native advertising, video, connected TV, display network, shopping, smart ads, performance max. What was fondly referred to as “The Facebook” has morphed into Instagram, stories, short videos, long videos, display network, ad network, hundreds of different ad units across several data compliance geographies around the world, and more. With this increased complexity comes the need for hiring and creating more comprehensive teams – divisions of experienced strategists in social, search, programmatic, and data analytics who can come together and develop overarching communication strategies passionately and with a deep understanding of those modern tools and the costs associated with them.

Develop An Advisory Relationship with your Advertising Agency and External Vendors

Advertising agencies will always remain at the forefront of innovation, ranging from technology to advertising units and creative endeavors, because of the inherent nature of their work. Serving multiple clients, encountering numerous creative ideas – media agencies see data cross-industry on a regular basis and understand that its insights can also be applied cross-industry. The modern advertising agency may not be a jack-of-all-trades, but it is certainly a jack-of-many-trades. Advertising agencies have evolved since the brief-work-output model of the 2000s to take on a more advisory role to clients. This shift to add management consultancy into the traditional agency mix has been a direct response to clients’ growing desire for better coordination between their marketing activities and business performance. Already, the likes of WPP and Publicis have made substantial investment into such integration endeavors. Rather than simply executing on a brief, passionate talent should be challenging the brief and leveraging their innovative, forward-thinking know-how to come up with cross-industry “what are other industries doing” ways to communicate creatively with the clients’ audiences. This is one scenario where more is more – provide in-house teams with more supercharged creative planning and insights, more data that procurement typically wouldn’t purchase, ensure that senior agency leaders are architecting not only on campaigns, products and launches, but also on advertising agencies given the advent of growth marketing and growth hacking marketing agencies. 

Agency owners need to embrace the insourcing trend that is coming – because, if business is truly personal, agencies should be the ones assisting clients to anticipate and implement change. By providing the weight of the entire agency to support the growth of clients, it allows agencies to do what they do best – get clients promoted, assist clients in generating award-winning work, and ensure that clients understand how to do the best work of their lives to allow for agencies to do the best work of their lives.

[7 Min Read]