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Picture: rawpixel.com on Freepik
Picture: rawpixel.com on Freepik

In 2023, the Association of National Advertisers, the largest marketing trade association in the US, reported that 82% of the 162 companies it surveyed had some type of in-house marketing agency, up from 78% in its previous survey in 2018, 58% in 2013 and 42% in 2008.

The association predicts that in-house agency penetration will eventually peak at 85%-90% and said in-house agencies should no longer be considered a trend as they have become firmly entrenched as part of the holistic marketing ecosystem and are now a “mainstay”.

In South Africa, however, there has been no real increase in in-housing at all, says Johanna McDowell, founder and CEO of IAS, the independent agency search and selection company. “Our Agency Scope 2023/2024 data indicates that in-housing has declined since the pandemic, though there is still a role for it among certain types of advertisers. Clients are doing certain things in-house, but they have learnt that creative people in general [enjoy] a variety of different brands to work on and prefer the stimulation of working in an agency environment, including the recognition they receive from awards shows.”

Hoorah Group COO Clyde Mallon says an in-house agency model is an effective way for brands to bring digital marketing capabilities into the company to transform their marketing approach. However, setting up an internal agency is not a one-size-fits-all approach, he believes.

“There are multiple ways to set up an internal agency: staffed internally by the client, which shifts all management and creative responsibilities to the client; a hybrid approach, where the business engages a partner to provide a managed internal solution for them, which is what we do at Hoorah; or a fully outsourced model, which is the traditional way of working with an agency. Many clients choose to operate with a combination of these models, leveraging different approaches to cover different aspects of their marketing requirements.”

Mallon says the hybrid approach allows the client to have the benefit of an external partner to drive best practice and creativity and to ultimately take on the day-to-day management burden while still benefiting from having an internally dedicated agency team operating in a model that is built to suit their needs. In this approach, the client owns their data and has their own custom operating model, tech stack, agency identity and culture aligned to their business.

“The major benefit of this model is that the client is able to build their own internal capability that can become an intuitive part of how they operate and ultimately [become] an asset to the business, rather than them relying on external teams to drive their digital marketing,” says Mallon, who has helped several companies establish in-house agencies, including Avon, Heineken Beverages, Nestlé and more recently, Alexforbes.

The major benefit of this model is that the client is able to build their own internal capability that can become an intuitive part of how they operate
Clyde Mallon

Junxion, Alexforbes’s new agency, has allowed the business to consolidate control of its marketing activities through a single point of entry. Previously, those activities were fragmented among a variety of agencies and freelancers. Operating on a hybrid model, some staff are employed directly by Alexforbes while others are employed by Hoorah. The Hoorah team provides strategy, oversight and management services.

In-housing, says Mallon, comes with significant benefits for a company like Alexforbes. “Consolidating with a single partner allows the business to realise significant cost efficiencies and build scale internally. The hybrid approach allows it to have the benefits of an externally managed solution where we take ownership and accountability for the success of the studio, but the staff are still embedded in their organisation. The operating model is also built bespoke to Alexforbes, giving it a greater level of control, direct access to its data and intimacy with the team.”       

Colette van Dyk, head of group marketing at Alexforbes, says the motivation for transitioning to an internal agency model was rooted in the business’s commitment to its clients. “We recognised the need for marketing initiatives that resonate with our audiences, fostering meaningful brand engagement and driving loyalty. Having a dedicated team within our organisation allows us to craft campaigns that speak directly to our clients' needs, preferences and aspirations. This direct connection enables us to deliver more impactful marketing initiatives.”

She believes the internal studio will help solve some of the challenges Alexforbes previously faced when working with a fragmented group of agencies. “There are obvious challenges inherent in the outsourced model, including the issue of the cost to manage multiple agencies and understanding our business, particularly when there is significant staff turnover within agencies.”

The big take-out: Setting up an internal agency should not be a one-size-fits-all approach.

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