Running a digital marketing business only appears to be getting harder and harder. While the majority of small businesses DIY their marketing (often with lackluster results), new data from the Association of National Advertisers (ANA) shows that big brands are moving marketing in-house at a rapid rate.
According to the ANA’s recent survey of over 400 client-side marketers, 78% reported having some form of an in-house agency in 2018. Roughly five years ago, that percentage was 58%. As to why brands are shifting, “respondents said that cost efficiencies were the primary benefit of moving agency services in-house, followed by better knowledge of brands, speed and nimbleness, and institutional knowledge.”
The benefits of “owning” marketing in-house are significant. They include more control, quicker turnarounds, more authenticity, better industry knowledge, more specialized and personalized capabilities, etc. According to the ANA study, the “top KPIs used to assess the effectiveness of in-house agencies are cost savings, speed to market, and business performance.”
Additionally, 90% of survey respondents said that the marketing workload of the in-house team has increased in the past year, with 65% saying it has increased “a lot.” These increasing demands seem to justify moving to manage these efforts in-house.
Another potential influence on this shift to in-house could be a more digitally savvy workforce, armed with digital skills and know-how that were once hard to come by. Also, some of the more technical aspects of digital marketing have been overcome by technologies and tools. There still is a tremendous amount of complexity and fragmentation in the space, but brands are feeling more confident in their ability to overcome these challenges.
On the other hand, while the majority are moving in-house, some brands have apparently gone back to agencies: 44% of brands established their in-house efforts within the last five years, but there’s only a 20-point increase in the use of in-house marketing. The reason for this apparent abandonment of in-house isn’t clear from the study.
Nonetheless, the trend toward DIY marketing for brands mirrors the DIY mentality of small businesses when it comes to marketing. While contextually very different, there appears to be a unifying psychology that is emphasizing ownership and control vs. partnership and outsourcing.
One other potential explanation is simply cost. Agencies, with expensive billable hours, can deplete a marketing budget quickly. SMB agencies, typically serve larger small businesses, charging more than most small businesses and sole proprietors are willing to pay. The providers very small businesses can afford are fewer and more limited.
Whatever the motivations for declining advertiser-agency relationships, this shift is making for a more competitive market. Ultimately, for any agency (big or small) to be most effective, technical skill and creativity won’t be enough. Agencies must rethink how they manage and price their services and seek more ways to integrate advertisers (clients) into the process where ownership of the brand is shared between both parties.