• by Karl Greenberg , September 5, 2013

Tough news for ad agencies if a new report from the Association of National Advertisers (ANA) is accurate. The survey-based study says more and more marketers are going in-house for creative, digital and overall strategy. Why? It's good, fast and less expensive -- and economic pressures are compelling marketers to do more with less.  

In its poll of 203 marketers in May and June with a followup in July and August, the ANA reports that 58% of marketers now use in-house agencies -- a 16-percentage-point increase from 2008. And over half of respondents say they have moved established business from an external agency to an in-house one. The study also says more than half of marketers are assigning newer marketing functions -- digital, social and mobile -- to their in-house agency.

"I think once upon a time in-house agencies had the lesser talent than external, but I do believe that's changing and in-house agencies are attracting good people on par with traditional agencies," says Bill Duggan, ANA group EVP. "The number of jobs at traditional agencies has shrunk over the years, and that has caused people to consider in-house and found it's not so bad over there." 

Duggan tells Marketing Daily that in-house agencies are also moving away from being just "order takers" for the marketers. So in-house creative and execution was bereft of the kind of healthy debate (ideally) between agency and client. "But now in-house is taking a much more strategic position." 

These in-house agencies -- per the ANA's definition -- can be whole departments, groups or just individuals with responsibilities that are usually done by an external advertising or other agency. 

Top advantages: Seventy-nine percent of respondents cited institutional knowledge, 74% said that in-house agency functions are a dedicated team, and 71% pointed to brand expertise. Forty-one percent of marketers said all three are main advantages. 

Cost efficiencies were cited by 88% of marketers as an advantage of in-house agencies. But only 35% of marketers say cost is the primary advantage. That's a 21% drop from 2008, the last time the survey was conducted.

While Duggan notes that agencies have been able to cut costs, they may have a challenge with speed -- which is critical for digital, social and mobile efforts. Seventy-one percent of respondents said quicker turnaround time is an advantage of in-house agencies.

As for quality of in-house, five years ago, 61% of marketers said a lack of deep strategic thinking was a weakness of their in-house agency. Only 30% say that now.