Majority Of Multinationals Have In-Housed Creative
A new study finds that more than half of large global companies are now using some in-house creative capability, as the benefits and difficulties of the arrangement become clear in the mainstream.
Global Trends in Creative In-Housing, a report commissioned by the World Federation of Advertisers from Observatory International, is based on responses from 53 advertisers with an approximate annual global spend of US$ 83 billion.
The reasons for in-housing are unsurprising. Cost efficiencies (of more than 30% in some cases), better integration (64%) and better brand knowledge (59%). Just over half (55%) also reported that their in-housed teams were quicker.
Most (82%) respondents stated that they are either satisfied or completely satisfied with the output of their in-house teams. 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%).
“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,” said Rob Foster, Senior Consultant at The Observatory International
While the suggestion of even more in-housing should strike fear into agency hearts, the reality is more complex, as 95% of respondents continue to work with external agencies. What it points to, however, is a shift in the kind of work.
For that vast majority of advertisers who continue to work with agencies, around 37% of creative output now comes from in-house teams. Most (94%) have creative capabilities for digital content, while around half have media planning and buying capabilities (which many had imagined would be the first element to go, given the murkiness of media supply chains).
In-house teams are attracting more work, with 82% saying workloads are increasing in the last year. Anecdotal reports also suggest that coronavirus has not led to cut-backs in these agencies, but in some cases quite the reverse.
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.
But different standards can be problematic: 43% said they briefed in-house agencies differently to the external ones, and 52% admitted that their in-house agencies were assessed by different KPIs.
According to the study, the trend toward in-housing has resisted one of the main criticisms held for the arrangement: that in-house teams would struggle to attract talent. Though it’s currently very early days, with most (74%) in-house agencies set up in the last five years, staff turnover has been low at 9%.
Still, nothing comes easily. One of the top challenges was managing the in-house team’s workflow, according to 62% of respondents. Similarly, prioritisation of tasks is an issue for 52%, while skill limitations worried 48% of respondents. Pitfalls are common, of course, but much of the available evidence is that it is a strategic realignment rather than a cost-saving exercise when done right.