The IHA: Background
Today’s economic environment is unsettled, to say the least. With a recession potentially on the horizon, some companies are looking to cut costs. When the hunt is on, it’s generally agreed that marketing budgets are the softest numbers on the spreadsheet, and therefore the first to be scrutinized. This is not a bad thing when the in-house agency (IHA) goes under the microscope. It’s one box on the org chart that’s actually proven to grow—in importance and workload—in times of economic downturn. Why?
Reasons Behind the Growth - Both Practical and Logical
A couple of decades ago, when IHAs first appeared on the landscape, their purpose was to take on much of the workload traditionally outsourced to external agencies. By bringing these deliverables in house, where they would be efficiently executed to the highest levels of quality, companies could significantly reduce costs and increase cycle times while safeguarding pivotal marketing data. That’s not all. In-house agencies could be a key tool in aligning interests across the entire executive team.
Marketers with goals to improve effectiveness could ensure that IHA teams were synchronized with product managers wanting a faster speed to market. . . CFOs looking to drive down expenses and raise ROI realized the IHA was the ideal vehicle to help them get there . . . The examples go on . . . and the point is this: In-housing means you don’t have to lose a step if the market turns; by growing your IHA investment to create value for your company, you can continue your momentum and take advantage of opportunities as they surface.
An Evolving Presence
When they were first formed, IHAs were known as creative services teams. They worked primarily as design studios producing Tier 2 and Tier 3 deliverables involving design adaptation (edits, revisions) and templated work. Then the Great Recession hit. In 2008, companies began decoupling work from their external agencies and enacted a cost-saving, efficiency-building strategy that put the right work in the hands of the right partner—which, by this time, was called the in-house agency.By 2010, many of these teams had made substantial gains in terms of their comprehensive capabilities, scopes of work and impactful support of marketing efforts. In short, they had become fully integrated, full-service agencies. And they would continue to grow throughout that decade, reaching a 78% penetration among ANA member corporations by October of 2018.
The Digital Wave
During this period, a transition to digital advertising had been steadily gaining steam. In 2020, the rise of COVID-19—in addition to social media’s popularity and marketing automation solutions—fast-tracked digital’s explosive growth in all directions. Cella’s 2021 In-House Creative Industry Report laid out the pivots from the preceding year: print design decreased 62%, contrasted with an 83% growth of digital design, 66% increases in both video animation and social media design/copy, and a 54% climb in live action video. And the pivot would continue into the next year.
The pandemic and the cost-optimization initiatives it triggered had a tremendous impact on the evolution of IHAs.
According to a September 2020 survey report by the World Federation of Advertisers (WFA), a whopping 74% of in-house agencies had been founded since 2015, and 82% had seen increasing workloads over the past year.
Reasons for moving creative work in-house? In addition to the cost efficiencies IHAs deliver (greater than 30% in some instances), respondents cited better integration (64%), increased brand and business knowledge (59%) and quicker, more agile processes (55%). It’s little wonder that data from Gartner’s 2020 Gartner CMO Spend Survey reported that 32% percent of marketing work previously carried out by external agencies shifted in-house in the previous 12 months.