Are in-house ad agencies a threat to mainstream ad agencies?

We ask ad industry experts if growing trend of in-house agencies will change the game for mainstream ad agencies going forward

e4m by Noel Dsouza
Updated: Apr 9, 2019 9:07 AM
Ad Agencies

In-house advertising agency no doubt has its perks and is gaining popularity among companies. An advertising agency owned by a company has to deal with only one client and one brand, thus ensuring maximum focus. Plus, the additional benefit is that campaigns can be generated at a faster pace. 

The reasons for companies to have in-house ad agency are many: knowledge of the brand, cost-effectiveness, confidentiality, speed and dedicated resources. As companies increasingly adopt the strategy of having an advertising agency of their own, we at exchange4media asked ad industry experts about the whole scenario and whether it will change the game for mainstream ad agencies going forward.

What makes an agency and its people thrive? The answer is pretty simple; it’s the stimulating habitat they reside in. This is a result of varied talent with different skill sets that come together to work on different brands facing different challenges.

“Cross-pollination contributes to constant learning and exchange of ideas between different groups. So while it may be attractive for some advertising enthusiasts to work in in-house setups, most opt out of such linear arrangements. The hardcore advertising lovers would rather be in a culture that celebrates madness and randomness and yet is geared well enough to adopt systems and processes when desired,” shares Simi Sabhaney, CEO, Dentsu India. 

According to a survey released by the Association of National Advertisers in 2018, 78 per cent of marketers are using some form of an in-house team. In the past, in-house agencies were largely used for making adaptations of creatives done by the mainline agency. Today, however, there are a few cases of them doing creative campaigns too. 

Raghu Bhat, Founder & Copywriter, Scarecrow M&C Saatchi, is of the opinion that this is part of an overall trend where, everyone, from stand-up comedians, digital agencies, media agencies, freelancers, production houses, marketing heads and Bollywood stars are thinking of creative campaigns.

“People are talking about the paucity of creative talent. If that's the industry truth, even in-house agencies would struggle to find great talent. Despite this, if in-house agencies are increasing, it means there is huge pressure to cut cost. Agencies should continue to believe that there are takers for great ideas and concentrate on creating that.” 

Experts believe that it all depends on the size & scale of the project. If there is a high-scale work that a company needs to churn out, in-house agencies will be beneficial.

However, according to Sriram Iyer, Chief Creative and Content Officer, Tilt Brand Solutions, and Kedar Teny, Chief Strategy Officer, Tilt Brand Solutions, an in-house agency can help one get faster turnarounds. But if one is looking at out-of-the-box ideas, they can only come from the outside.

“It depends entirely on the client's mindset; if he is open to fresh ideas coming in or not. Fresh ideas can come in only if the project is outsourced. In-house will help you get faster turnarounds. But if you are looking at out-of- the-box ideas, they will only come from the outside. There is room for everyone,” say Iyer & Teny.

“There are a bunch of marketers who value the outlier’s point of view and that will continue to work. On-air promotions are a great example of in-house agencies’ work. For instance, when they want to churn a day-date-time promo for a particular show, they don’t need outside thinking to come in on that,” explained the two.

Like, in case of an IPL, it is very easy to stitch together a promo with the footage that the brands have got from league owners. “So, it is not done by marketers as an outlier to rule out agencies. It has been done because there is a business requirement and they know exactly what to do at the moment,” the two added. 

In-house agencies have their benefits and are cost-effective. But delivering ad campaigns at an efficient level should not come with the price of a decline in creativity. So, the question arises: Does in-house ad agencies really pose a threat to external ad agencies?

Sumanto Chattopadhyay, Chairman & Chief Creative Officer, 82.5 Communications, The Ogilvy Group, certainly does not think so.

“I don't feel that in-house agencies pose an extra special threat to agencies like ours. There already is competition from the universe of mainline ad agencies. If anything, I would say that in-house agencies are not always equipped to deliver the same quality or scale of work that a full-fledged agency can. And if they are, then more power to them. May the best agency win, be it in-house or external,” remarked Chattopadhyay.

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