Combating the rise of in-house agencies


In-House Agencies-Friend or Foe?

We’ve talked about trends like increasing amounts of project work from our latest survey report, and another is the rise of in-house agencies.

Nearly 80% of agencies predict their clients will move some marketing services in-house in 2017-that’s a 23% increase over 2016’s prediction.

Now it’s only that-a prediction, but it’s based on what agencies are seeing and hearing.

The good news however: marketers predict a smaller shift, with 84% saying they’ll be moving 20% or less of their marketing services in-house in 2017.

Nevertheless, it’s yet another potential roadblock to your new business strategy.

Which leads me to an email conversation I had with an agency considering our services.  He pointed out our recent report was helpful in that it validated several trends they’d experienced.

As I’ve talked to agency principals the past few weeks, the one thing they all point out, in regards to our report, is the affirmation that other agencies are going through similar experiences.

Best to Combat In-House Agencies?

There are two ways to look at this, you can combat the trend, but in some cases, you can also embrace it.

For example, I revised this post after I talked to an agency principal this morning-he mentioned they’ve been working with a client for years now who’s been heavily investing in internal resources.

They don’t see it as combat, but a chance to supplement, act as part of the team or guide some of that internal activity.

But then there are those cases where combat is in order. The biggest edge you have as an agency in combatting work moving in-house is this: in-house agencies don’t (typically) possess the innate skills your agency does.

You know this of course, but here’s the problem (with apologies to in-house agencies)-they often think they do possess those skills.

That’s your real problem, and you can counter that, but you have to show your clients, or potential clients, that’s the case.

How? I came across a must-read post by Paul Fahey at Overit, titled 4 Ways Mid-Sized Agencies Need to Evolve in 2017.

You should read it in its entirety, but it was serendipitous, as it fit very well into the discussion on in-house agencies and what it means for new business.

Enter Paul’s post:

We believe that it is the agency’s job to bring tools to the people (our clients) who aren’t classically-trained in what we do. That’s how we bring value – by acting as our clients’ missing piece, accomplishing what they wouldn’t be able to do on their own.

But in order to bring that value, you have to actually land that potential client first. And of course, it’s not just in-house agencies you’re competing with. Per Paul:

As a small to mid-sized agency, if you want to compete with larger firms, you need to become an expert in the verticals where you want to work.

Marketers have told us just that-in previous reports, 87% of marketers said it was important the agency they hire specialize in their industry.*

So while Paul’s post isn’t directed specifically at the in-house agency rise, the steps he and the team at Overit have taken as an agency will absolutely help to counter that trend:

-We went after projects we didn’t think we’d have a hope of getting – and got them

-We pursued passion projects – launching a new alternative weekly in the region, sponsoring our fourth TEDxAlbany event and more.

-We went hard on virtual reality and new technologies and pounced on holes in the industry.

Paul talks in his post about the agency developing a risk-taking culture-as an agency, it’s something you should consider, in whatever form that takes.

So-while our report discusses some of the obstacles you’ll face in 2017, there is absolutely reason for optimism, whether that’s the increased amount of spending marketers predict this year or more opportunities in the form of project work (land and expand!)

But, you’ll only benefit from those opportunities if you sustain a clear point of difference, provide value to your current and potential clients and have a strategy in place to consistently drive new business.

*(Specialization is a whole other post, and there are obviously different ways you can specialize beyond a single category.)

Author: Lee McKnight Jr

I’m the VP of Sales at RSW/US. We specialize in working with services firms to help drive and close new business-if you need help with that, email me at lee@rswus.com. What I actually do: drive sales efforts to bring ad agencies and services firms on board with RSW, create content around successful new business tactics and help drive RSW/US marketing objectives, including social media channels, blog content, webinars, video and speaking engagements. Dig it.