Are you in or out?
Create a thriving agency ecosystem by utilizing both in-house and outside resources to their best advantage
Internal agencies are having a moment. There has been a ton written over the past few years about how to internalize traditional agency functions—the thought is that internalizing functions like media planning or creative development HAS to be less expensive. In fact, the ANA reports that 82% of companies have an in-house agency, and 87% are satisfied with that capability1. Great news, but we frequently get asked what is the “best” model for maximizing the value of the in-house/outside agency combo. And now with GenAI, the equation gets even more fraught—I mean, the copy practically writes itself! As usual, the truth lies somewhere in the middle.
Sure, insourcing can allow for efficiency, speed, etc. But chances are, running an agency is not what your company does for a living—managing talent internally is not necessarily less expensive than renting the capability you need. And frequently you need the outside perspective an agency can bring. So, while we spend a lot of time helping clients in-house, we frequently feel the real value comes from creating a successful ecosystem of BOTH in and out-of-house resources. And while GenAI is a wonderful tool for making people and processes more powerful, it is not going to replace your copywriters, no matter where they sit.
So, how to get started? How to know you’re doing it right? How to decide what to bring in and what to keep out? How to make everyone play well together? How do you measure success?
Get smart about your options and pick what’s right for you
Generally there are 3 types of internal agency models: cost center, chargeback and profit center. All have their pros and cons. We frequently get asked “what is the best model?” Truth is, there is no “just right” answer—it depends on your organization, and what you want the internal function to accomplish. But as far as WHO is being in-housed, we do see trends: 49% of in-house folks are creatives, 14% are account management and 13% are production. On average, 79% of in-house agencies resources are full-time employees1.
Be clear about what’s done where
Whichever business model you choose for your in-house resources, you’ll need to be clear about what they do as opposed to what your external agencies do. This is a strategic decision that accomplishes a couple of things. Of course, making it clear who does what provides role clarity. But it also allows the in-house and out-of-house resources to play well in the sandbox, which is key to creating an efficient working model. We advise our clients to think about it this way: if you consider the strategic importance of an initiative, juxtaposed with the operational contribution, activities with high strategic importance/low operational contribution are usually best outsourced, whereas activities with lower strategic importance/high operational contribution are great candidates for an in-house facility. Things that fall in the middle must be strategically allocated depending on the business model. Think of it as an ecosystem approach.
So what’s right for your organization?
Choosing the right service model for your marketing organization is one part strategic, one part financial, and one part situational (what will work in your unique corporate culture). Making this decision requires rigor and data. Things to consider:
1
Cost Analysis
What model makes the most sense from a financial perspective?
2
Scope Requirements
Level of capacity and capabilities needed to deliver on marketing scope. Can this be handled in-house or is org upgrade needed?
3
Skill Capabilities
What are the requirements needed to deliver on scope and do/should these skills reside in-house?
4
Change Management + Process Design
If some scope is to be managed by outside agencies, how (or should) they work with the in-house agency to ensure no redundancies and delivery effectiveness?
5
“Flex” Capabilities
Determine strategy to infuse in-house agency with additional capabilities when workload demands it.
6
Contracts, KPIs and SLAs
Develop appropriate and benchmarked performance metrics that ensure that expectations, business objectives, and effectiveness goals are met by both internal and external agencies.
Then you need to consider data, talent, tools and processes. And most important but often ignored: the change management plan to make sure it all works.
An in/out-of-house agency ecosystem can lead to better, more efficient workflows, and can help foster powerful innovations that transform your organization’s marketing and MROI.
If you’d like any more data or strategies on creating a successful agency ecosystem, feel free to reach out to us.
How can KPMG help?
KPMG Customer Advisory helps some of the world's leading marketing, sales, and service professionals make the right investments that deliver meaningful, sustained growth. At every step, we deliver insights that help you make decisions with precision and confidence. Together, we’ll turn opportunities into tangible, transformative results. Let’s start the conversation.
Footnotes:
- ANA, The Continued Rise of the In-House Agency: 2023 Edition, (May 2, 2023)
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