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September 16, 2013
Should We Fear the In-House Ad Agency?
 
The agency neighborhood in AdLand has definitely seen better days. It is under constant scrutiny and criticism. Even those who live and breathe the agency world admit to having a love/hate relationship with their work. The diversity problem, the women problem, the compensation problem, and the spec/no spec problem are all reasons why we could hate on agencies. But as part of the neighborhood ourselves, we understand why it is hard to quit the life.

But now marketing and advertising departments in large and medium-sized businesses are undergoing a transformation. No longer are some businesses calling their in-house group of people the "marketing department," no; now they are the "in-house agency."

At first it sounded comical. To our knowledge, the biggest "in-house" agencies have been seen in the car business, with GM and Ford having agencies dedicated to their lines. But now the idea is spreading, and spreading quickly.

Apple was in the news last week because it plans to nearly double its 300-person marketing team (shameless plug: Apple, there's a great job board if you wanna add those jobs online, just saying).

Though brands want to reduce their reliance on agencies, they admittedly see the benefits of using one. The question, then, isn't why they are turning their departments into in-house shops, but what can current agencies do to win those businesses and brands who still value the "agency model"?

The truth is, friends, agencies have done a poor job displaying value. For if brands saw the value of current agencies, why would many believe that a comparative advantage exists, and they could build one themselves? The current news of the in-house agencies makes it clear that they are willing to spend, so what must agencies do to show that their time, experience, network, and talent are better than what the brand can do?

Agencies need to answer. We are all running out of time.

Or, should agencies get creative? Why not? What if agencies can put themselves up to be brought in as an in-house agency; create bids for a multi-year contract to work solely for one brand? That would be interesting, and a totally different approach to business. If the agency is good, as the contract deadline approaches, the brand could re-sign, or let other businesses bid to get them. Obviously, there are some holes in the idea, but looking at a new way of doing things ins't going to hurt. 

At least, that's what all the brands think.

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Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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