In-House Marketers Take on More Roles

External marketing firms are facing tough times as American companies rely more heavily on internal departments to do their work, according to a new survey by the Association of National Advertisers (ANA).

In fact, 58 percent of the firms in the ANA survey currently use internal staff, up from 42 percent just five years ago.

More than half of those using internal staff (52 percent) have assigned newer media management functions, including social media, online display advertising, and search engine marketing, to internal teams in the past three years. Fifty-six percent have moved other more established marketing functions from external agencies to internal teams in the past three years.

The most common function moved in-house is writing creative for collateral and promotional materials, but other services handled more internally include email, trade show and event materials, direct mail, brand identity, media planning and buying, and internal company communications.

Much of this shift is driven by the pressure to do more with less. Eighty-eight percent of survey respondents cited cost efficiency as a primary advantage of in-house teams.

Beyond cost, marketers cited institutional knowledge (79 percent), a dedicated team (74 percent), brand expertise (71 percent), and quicker turnaround time (71 percent) as the biggest advantages of using in-house teams. Other factors include greater control, easier integration, confidentiality, and full ownership of marketing data.

The quality of in-house personnel also appears to have improved substantially. Five years ago, 61 percent of marketers said their in-house teams lacked deep strategic thinking. Today, only 30 percent cited this as a disadvantage of their in-house teams.

Bill Duggan, group executive vice president of the ANA, has noticed a shift in perception as well."For years, in-house agencies were known as being fast and cheap, but not necessarily good," he said. "Now, many are good—in fact, very good!"

"Internal [staff] can deliver significant savings in both cost and time," notes Marta Stiglin, principal of Stiglin Consulting, an Andover, MA–based firm that focuses on brand strategy and organizational efficiency. They "are capable of contributing significant value to the companies they support," she adds.

Some of the firms that Stiglin has worked with have saved 10 percent by moving functions in-house, while others have reported savings of 35 percent or more. But Stiglin says lower costs are not always guaranteed.

"You want to optimize your marketing investment with whatever gives the most bang for the buck," she states. "For some, that could mean going all internal, for some it could be a mix of internal and external, and for others it could be all external."

Determining where a firm fits within that spectrum is not easy, she cautions. "It's a big commitment to make. Make sure you've considered all the angles, and the risks and rewards of each, before making that commitment."

The decision, while potentially a long-term one, isn't necessarily permanent, she adds, noting that in-house teams and external departments don't have to be competitors. Both have roles to play, and they can complement each other in any company's overall marketing plans, she adds.

Still, Bob Liodice, president and CEO of the ANA, sees this as a wake-up call for external agencies. "The growth trajectory of advertising agencies is in question, as marketers move existing and emerging functions in house. The emergence of the in-house agency is a potential warning sign for agencies," he said in the report. "We urge our agency peers to adapt to this new reality and offer even greater value to avoid gradual disintermediation with clients."

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