“Agencies that wish to grow existing client business or unlock new business opportunities must relinquish the idea that in-housing is a threat.” Amen to that.

The above is from a new report from the IPA, somewhat painfully titled ‘Shift Happens’, which examines the growth of in-housing and what external agencies can do about it. The authors, Rhona Glazebrook and Janet Markwick, pull together over 35 different reports into in-housing from industry groups such as ISBA and the WFA, as well as commercial organisations including Cella and Amnet, to provide a well-rounded picture of how and why in-housing has grown.

“Whilst there is a strong temptation to assume that in-housed marketing services only serve to feed that ever-hungry, always-on content monster, today’s truth is a little more uncomfortable than that,” they warn. “The breadth of in-housed services goes way beyond production and digital marketing. It spans everything from creative strategy to media planning, and even TV and OOH creative advertising.”

Echoing IHALC’s IHA Benchmarking Survey, they note the ambition of IHA leaders to evolve and the rapid maturation of the sector. There has been a “shift in status from cost-cutting to a core part of the marketing mainframe”.

In-housing is not limited by brand type, by defined models or in its ambition. It’s always in beta as organisations test and learn. “In-housing delivers efficiency and effectiveness today and is capable of transformation tomorrow,” the report’s authors say. “The endgame looks to be a fully integrated real-time, in-house, marketing ecosystem.”

NEW TERMS OF ENGAGEMENT

So where does all this leave agencies? As the IHALC survey revealed, although IHAs may be ambitious to achieve lead agency status, they all need external partners – whether that is for creative, media, production, design or other areas of expertise. Every IHA is different, and partner requirements will be similarly diverse.

But the terms of engagement have changed. As the authors note, for external agencies, “There is less opportunity for them to be the Titans of the relationship, dominating service provision along the entire marketing value chain.” Instead, agencies must figure out where and how they can add value in this new world.

The endgame looks to be a fully integrated real-time, in-house, marketing ecosystem.

A complicating factor has been the rise of the specialist in-housing agency Oliver, whose model has proved highly successful. The report suggests that agencies could learn from the way that Oliver builds “integrated partnerships” with its clients, providing implanted studios that combine “data, media and creative, knitted together with tech”. But there are relatively few examples of this in practice – The&Partnership has been one of the more innovative agency models in the UK while M&C Saatchi recently launched the Micro Agency in Australia with the goal of designing and building bespoke in-house and hybrid marketing capabilities for clients.

Noting the ability for in-house agencies to shift in response to the demands of a new marketing landscape, the authors suggest that agencies should “invest in and build their own automated platforms” and that they “could also partner/acquire AI capabilities to provide new ways to achieve cost efficiency”. But agencies’ track records in building their own tech platforms is not strong, and there is a plethora of dedicated systems on the market for IHAs to choose from when it comes to automating production.

INTEGRATING CREATIVITY WITH MARKETING

There is a call for agencies to “shift from being suppliers of marketing services to becoming truly integrated partners, ones with an inside-out understanding of their clients’ businesses” but such suggestions have been made consistently for the past decade and more. Surely the smarter agencies are already doing this and yet it has failed to stem the growth of in-housing.

Where the authors offer perhaps more useful advice to agencies is when they state that “The way forward lies in a fluid and frictionless integration of their highly creative and strategic skills within their clients’ marketing ecosystems,” particularly when it comes to applying those skills to longer-term brand-building. When the IHALC survey asked IHA leaders what they most valued from their external agency partners, it wasn’t AI or automation platforms that they asked for, neither was it the provision of implanted teams.

Every brief has been such a big ordeal. It’s not very fluid.

‘Access to skills and talent’ is what IHAs value most from the relationship. Second comes ‘A fresh perspective’ and third ‘expertise in specific sectors’ – surely all offerings that agencies would pride themselves on. Rather than try to compete with what IHAs do well, agencies should concentrate on the creativity that IHAs can struggle to replicate and the senior strategy capability that many lack. But they need to offer this in a more flexible way.

As Caroline Hipperson of Funkin Cocktails complains in the IPA report, when working with big agencies, “Every brief has been such a big ordeal. It’s not very fluid. They go away and think about that in their secret creative corner and then they present this big hoo-ha to you, and you are going to have to buy one of the three ideas… That doesn’t work in a business model that has to act fast, especially not a model where digital and social is so important.”

There is a parallel here to what is happening with production. In the report, Graeme Barnes of Free Now expresses his frustration with an outmoded shoot process: “If I go to a big agency then the normal response will be ‘of course we can do that’, and then you get a probably touching on the millions kind of a quote, and they want to take weeks in pre-production and planning and take a whole army of people out there. What I really want is for a photographer to go out there and give me his camera reel.”

There’s one other, rather large, elephant in the room which is not addressed in the report: purpose. Creative leaders such as Steve Harrison and Nick Asbury have argued persistently and vociferously that agencies have abandoned their core role of helping brands to sell in favour of trying to “change the world” with social good campaigns that often seem to be created purely with the goal of winning awards. If the idea has taken hold that agencies are only there to provide jury-bait for ambitious marketers who want to win at Cannes, while the IHA gets on with the real business of sales, then that is only going to consign agencies to further irrelevance.

As the report’s authors say, “agencies must focus on identifying the role they want to play in delivering brand growth… There are opportunities out there, but there are also some critical choices to be made, and fast.”

‘Shift Happens: What the evolution of in-housing means for agencies’ is available from the IPA.

For more on in-house agencies, visit Creative Review’s dedicated content hub sponsored by the In-House Agency Leaders Club, The In-House Life