In-house agencies suffer 'identity crisis' as legacy red tape stifles potential

An identity crisis envelops the in-house agency (IHA) world as legacy red tape stifles their true potential, new research has found.

A study, which was carried out by the In-House Agency Forum (IHAF) in partnership with Forrester Research and includes feedback from more than 360 companies, underscores the importance of such internal structures stepping out of the shadows of their external counterparts to be empowered to take the lead, operating with more autonomy and trust.

IHAF’s 2019 findings indicate that 72 percent of corporations have an IHA -- an increase of 12.5 percent from its 2018 study. Of those, 28 percent are with IHA that formed in the last five years. And, 59 percent say the size of their in-house teams have increased in the past two years, with 23 percent noting it has stayed the same.

One thing is for sure: IHAs are advantaged by a combination of institutional knowledge, creative capability and proximity to the business, affording them opportunities to influence strategies, direction and decisions in ways that transcend the traditional agency model.

However, brands are routinely their own worst enemy, highlights the report.

"While IHAs may be enabled by institutional knowledge, proximity and creative prowess, they are simultaneously stymied by operating practices and decision-making hierarchies that limit their ability to contribute more fully," said in-house expert and organizational consultant, Marta Stiglin.

"There’s opportunity to capitalize on the advantages of having a skilled ‘agency’ embedded within a corporation. The reality is that doing so could mean dismantling the traditional paradigm of clients being in command and control."

Marketers indicate that while IHAs have a high degree of autonomy executing projects, the majority do not operate autonomously with regard to marketing communications and creative strategy.

When asked about their diligence as clients, 54 percent of corporate marketers admitted to demonstrating less rigor when planning, scoping and initiating projects with internal resources versus external agencies. Those same clients are decidedly engaged, however, when it comes to directing in-house output -- with 87 percent of marketers saying they have significant to moderate influence over the work produced internally.

Lack of alignment regarding the remit and functional focus of IHAs may also be holding these teams back. Within the past two years, 65 percent of IHAs have undergone some sort of reorganization. And, while 78 percent reported having a clear mission, purpose and/or objective within their respective companies, 42 percent of marketers are unaware of what the IHA’s mission, purpose and/or objective is.

Strong, skilled leadership is vital, suggests the research. While 51 percent of those leading today’s IHAs arrived at their current positions via traditional external agencies, their effectiveness as leaders is lacking, with only 31 percent of marketers indicating such leadership is highly effective and 53 percent saying it is just somewhat effective.

The IHAF study goes on to reveal that although three-quarters of companies invest in formalized leadership training and coaching, fewer than two-thirds make leadership programs available to IHA personnel. With more than half of in-house leaders matriculating from external agencies where professional development dollars are scarce, most are learning on the job within corporate cultures that are hard wired to contain agency services. To evolve higher-performing in-house agency leaders, a more-deliberate corporate commitment is required.

When asked if their in-house agency is adequately funded, more than half (52 percent) of respondents said it is not. Eighty-two percent of IHAs augment their existing talent pool with external resources to address capacity constraints (not having enough people to handle the volume of work) and capability limitations (specialty skills and/or expertise that is not resident within the current workforce). In fact, 79 percent said that specialty talent and capabilities need to advance internally over the next two years with video, digital, social media and analytics topping the list.

Stiglin added: "For in-house agencies to become an integral, competitive advantage, corporate execs need to not only support what the model is today but be daring enough to explore its untapped potential, redefining what it can be tomorrow."

Roger Hyde, SVP, advertising and creative services at AT&T, said clichés about internal agencies including the challenge to lure and retain great talent were the nitrogen that fueled the team’s motivation to disprove them.

He said: "It was clear that we had to offer our in-house employees competitive pay with best-in-class benefits including a competitive 401(k) plan, a formal bonus program (rarely offered by agencies or production companies) and some form of time-based stock ownership for senior-level folks.

"Not only does this aid in our job offers, it builds a sense of ownership and loyalty for the brand, where we’re all working toward the same success metrics and rewards rather than hoping the agency doesn’t find itself in an RFP turnaround a year from now.

"There are many other influences aside from compensation that affect the attraction and retention of top agency talent. These include the variety of lines of business, culture and team dynamics, physical and technological work environment, ability to enter (and win) industry and peer awards, and, above all else, the possibility of much-improved work-life balance."

Work/life balance is something that Kelli-Rae Coughlin, management supervisor at Taco Bell Design, echoes. 

She said it’s becoming increasingly easier to snare top-tier talent, especially when you remind them of "culture and collaboration."

"The stability that comes with in house contributes to a deeper and more integrated brand experience," Coughlin explained. "We are one team with great respect for each other. We have broken the barriers of client vs. agency and gained greater visibility to company goals and strategies. As a result, our talent can be trusted to do their jobs without obstacles."

She also highlighted the importance of internal creatives seeing their own work.

"Too often at big agencies, the blood, sweat and tears spent on that big pitch ends up on the cutting room floor," she continued. "An in-house creative team has the opportunity to see their work come to life across multiple channels, from P.O.P. to experiential and everything in between."

The creative quality output of IHAs is also something that comes under scrutiny.

Gail Bruce, senior manager, creative operations at Whirlpool, said the organization uses a single scorecard to measure the performance of its in-house and external agencies.

The section of the scorecard that relates to creative quality consists of the following criteria, weighted as 35 percent of the total score.

Demonstrated delivery of creative work that is a consistent and effective representation of our brands -- aligned with business and brand strategies.
Bruce said: "Within this measure, we evaluate whether the creative work is representative of our lead campaign strategy, design and messaging. We also determine if the work aligns with our corporate brand standards, including legal and trademark rules."

Demonstrated development and delivery of creative solutions that meet or exceed business needs.
"We typically start with two to three initial concepts. From there, we assess whether the proposed ideas deliver on the objectives stated in the creative brief(s) -- namely, assessing the merits of the work based on new, innovative and visually differentiated solutions, scalability, practicality specific to cost and installation, and ability to be executed within the timeframe and across all of the channels that apply."

Demonstrated quality of copywriting, specifically.
"We aspire to content that surprises and delights. Accuracy and consistency of brand voice and product features and benefits are also a must. And finally, the content needs to align with the approved message manager."