SXSW Sydney: Are we witnessing the beginning of the end for the traditional agency?
(L-R): Maxwell
With 78% of Australian marketers leveraging an in-house agency model in some capacity according to a recent survey, is this the beginning of the end for the traditional agency?
Presenting research at SXSW Sydney last week, in-house agency consultancy ~lution’s founder and CEO, and executive chairman of the In-House Agency Council (IHAC), Chris Maxwell, explained the rise of the model and why brands need to start looking internally for various capabilities.
According to the consultancy’s recent survey, 78% of marketers in Australia in 2023 used some form of in-house or hybrid capabilities, placing the country as the second highest for in-house agency penetration. The US takes first place, at 82%, while Europe was close behind at 76%.
“It’s heading this way everywhere in the world,” Maxwell said. “And of course, it goes back and forth a bit, some brands downsize, and then bring it back, but the broader trend is consistent.”
In fact, the past couple of years have seen a significant increase in the adaptation of in-housing, as it was up from 63% in 2021.
(L-R): Maxwell with IHAC’s Abby Blackmore and media consultant Vinetha Manthena at SXSW Sydney
So why are brands internalising their capabilities?
According to ~lution’s research, the average marketer could name 8.6 benefits – from cost efficiencies, to better brand knowledge, to speed and agility, marketers are seeing the perks of working within.
“Every marketer is making these decisions for a reason,” Maxwell said. “And there really are so many benefits – overall people are saying its just easy.”
For brands that adopt hybrid models, marketers surveyed claimed 69% of the work is being done in-house, and 31% by external agencies. This has flipped dramatically from 2021, where only 30% was being done internally.
“The industry, however, hasn’t flipped that rapidly,” he explained. “I’m not sure that’s actually representative of the spend and movement of the money in the industry, but this is what they claim.”
But, marketers are also aware of the challenges and limitations that come with in-house models – creative diversity, wider industry knowledge, managing workflow, and keeping up with the evolving technological landscape were among the most popular.
“Lots of businesses have stuffed it up along the way, and these challenges are real, they’re valid,” Maxwell continued. “So it’s clear there is still a need for other models, including external agencies.
“We love you,” he said, speaking to external agency leaders in the room. “People often come and ask ‘aren’t you guys destroying the agency model’, and we want to make it clear that that’s not true. We’re just about finding ways for brands to work with you better.
“We’ve got to find ways to give brands the services they need… and they still need external support. They still need creative diversity, the expanded capabilities.”
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