I just finished an article about creativity that was inspired by a video from John Cleese on the subject in 1991. In the video, he talks about how most companies have cultures that tend to close down the openness that creativity needs to flourish. Then I read that the ANA (Association of National Advertisers) has just published a study that shows that in-house agencies at brands have grown substantially in number and size in recent years.
Of the 203 brands that responded to the study, 58% said they now have in-house agencies (up from 42% in 2008). The biggest reason for the growth cited was cost, with procurement being a big factor in the shift. The study pointed to the dark side of this development at the same time, which might not have occurred to the bottom-line oriented procurement folks.
As one might guess, the two biggest problems cited are market awareness and creativity. Staying on top of key trends is a problem with in-house agencies apparently. Brands say it’s now an issue 45% of the time (up from 34%). Lack of creative innovation was also a rising concern going from 34% to 43%.
This fits with what John Cleese describes as the myopic perspective of typical organizational cultures and the lack of freethinking, which is necessary for originality and innovation. It’s also my personal experience of working with many Fortune 100 brands. These are not organizations that encourage or support out of the box thinking for all of the lip service they may pay towards it.
For all but the people at the top, the idea is to minimize risk to the company and most importantly to your own career. Originality by definition is risky and while many in an organization understand the need for it in marketing, they just cannot get it done. That’s one important reason why outside agencies are valuable. The old adage that when outsiders talk people pay more attention is true and is an advantage that an outside agency has that an inside organization doesn’t.
An agency brings a very different perspective to a brand. First, the politics of the organization don’t influence us as much. We want to keep the business and be loved in the process of course, but most agencies I’ve seen (and especially my own) put the integrity of the work first.
We have to or we’ll lose our best people. In my experience, the good agency talent is driven to do brilliant work that they are proud of. I think this is a different mindset from the corporate insider. They care to do great work too; it’s just that their calculation is much more complicated.
Then there’s market perspective, which is critical today. Agencies work on lots of different accounts. We see the world through many different sets of glasses, so our perspective is much richer and more informed. That’s why we are able to stay on top of trends much better than our corporate partners. This feeds our strategic view of this enormously more complex market and makes our planning more insightful and innovative. In a digital world where consumer dynamics are changing almost daily, this is a critical value that agencies bring to their clients that they really can’t do as well themselves.
Of course there are some things that in-house agencies can and perhaps should do. Managing the day to day of social networks makes sense, for example, because insiders are much closer to the answers that consumers need quickly. But there are many areas that make much less sense in practice. One client comes to mind that decided to cut content creation costs by doing the work of making videos in-house. The result was less expensive content that nobody watched. Procurement was happy, but then they’re not responsible for results.
My guess is that this trend will continue, especially with organizations that regard agency work as a commodity, like buying supplies. But sooner or later someone is going to ask if the results that these in-house organizations produce are better or worse than working with outside agencies. Then the pendulum will start its inevitable swing back.