ANA Study Shows What Capabilities Brands Are Investing In for Their In-House Agencies

In-house agencies are not a nascent trend anymore, according to a new study from the Association of National Advertisers (ANA), in which 82% of ANA member respondents said their company has an in-house agency.

The ANA conducts the study, called, “The Continued Rise of the In-House Agency: 2023 Edition,” every five years. Its results show there’s been a significant increase in in-housing during the last decade, with 58% of survey respondents in 2013—a 20-point rise from 2018—indicating they had in-house advertising capabilities.

In-housing became increasingly more common over a long time period. In 2008, when the ANA conducted this research for the first time, only 42% of respondents said they had an in-house agency.

“One of the very simple top-level findings is that in-housing is not a trend,” Bill Duggan, the ANA’s group executive vice president, told Adweek. The survey results indicate to Duggan that in-housing is now so pervasive, at least among ANA members, that it’s become inaccurate to frame in-housing as an exception.

Other research mostly supports the ANA’s findings. In 2021, a study fielded by the In-house Agencies Forum (IHAF) and Forrester Research similarly found that 77% of survey respondents had an in-house agency. That research also indicated that the Covid-19 pandemic did not slow in-housing, despite the pandemic slowing ad spend. It also implied that the pandemic contributed to burgeoning in-house teams, as many agencies laid off swaths of employees and those employees accepted in-house work.

With in-house agencies’ scale and larger headcount, marketers must turn their attention to ironing out operational kinks that prevent many in-house agencies from expanding service offerings. Brands will continue to debate some questions. Namely, will in-housing truly generate cost savings at a time when employers are constrained and industry-wide layoffs abound? The research is also an indication that external agencies must either support now common in-house practices, or accept that one of their competitors will.

Is in-housing contributing to fewer AOR relationships?

Regardless of how many marketers boast in-house agencies, the ANA report indicated 92% of them still use external agencies. This means that projects are becoming more dispersed than they used to be, (unless in the cases where the marketing budget is growing). Marketers’ more dispersed budgets inevitably lead to more project-based assignments and fewer AOR partnerships.

“In-house agencies have, to some extent, disintermediated external advertising agencies,” Duggan said. He speculates a various factors behind this: Increased pressure to turn around social media content faster and the relative cost savings of developing some content, like sales enablement materials, internally.

And while the research does not include specific data on marketers’ average cost savings, respondents indicated cost savings is the top KPI they use to evaluate their in-house agency’s effectiveness. It implies that, given all the expansion, marketers must be seeing some financial benefit.

“The top reason you go to an external agency, thank goodness, should not be cost. But that’s the top reason for [deciding to] in-house. It’s safe to say there’s absolutely an economic benefit,” Duggan said.

In-house media capabilities still lag behind creative

Last May, the prospect of cost savings prompted Whirlpool to shift a majority of its creative marketing investment away from its longtime agency partner Digitas. The brand reallocated the funds to launch a new in-house agency called WoW Studios.

The studio’s capabilities are broad. They include North America’s CX operations; strategy, creative and experience design; integrated and studio production; and marketing sciences and digital delivery.

The top reason you go to an external agency, thank goodness, should not be cost. But that’s the top reason for [deciding to] in-house. It’s safe to say there’s absolutely an economic benefit.

—Bill Duggan, executive vice president, ANA

The in-house agency’s purview does not include media, which Publicis Media’s Spark Foundry continues to manage. Whirlpool is not alone, since it’s still uncommon for in-house agencies to manage media. Compared to the 92% of in-house agencies handling creative for traditional media and the 95% handling creative for digital media, just 54% of respondents handle media planning or buying services in-house.

It means that marketers still overwhelmingly rely on external agencies for media services, even as in-house agencies take on more marketing tasks.

Media’s slow in-house expansion surprised Duggan, who expected survey results would reveal more pervasive in-house media practices, especially because 34% of survey respondents indicated that owning, controlling and protecting their first-party data is one of in-housing’s benefits. The leader expects more in-house media expansion is still to come.

Before it does, brands must determine how much they financially benefit from external agencies’ relationships with publishers and their negotiating power, often called “buying clout.”

Since most marketers correctly recognize media buying as a highly-technical job, the industry has a relatively limited understanding of how media practitioners actually work. If they plan to build successful in-house media practices, marketers must also bridge that knowledge gap and provide in-house media employees with the learning and tools they need to succeed in complex roles.