The “explosive growth” of in-house agencies is having a powerful effect on the contours of the advertising and marketing industry, according to a study by the Association of National Advertisers (ANA).

A survey of the trade body's members found that 78% of participating enterprises currently have in-house agencies – a major increase on the findings from similar research in 2013 (58%) and 2008 (42%).

“The explosive growth of in-house agencies is one of the most significant trends in the advertising and marketing industry today,” the report said. (For more, read WARC’s in-depth article: ANA cites “explosive” growth of in-house agencies.)

Released a week in advance of the ANA’s annual Masters of Marketing Conference, the analysis took a deep look at the increasing popularity of in-house agencies.

And the responses to a key question for firms with internal shops – “Think about all the work your company does both in-house and with external agencies; approximately what percentage of the work is done in-house?” – was telling.

The ANA’s report, “The Continued Rise of In-House Agencies”, stated that on average nearly 60% of the advertising assignments are now being handled by in-house agencies.

“For companies that have both in-house and external agencies, the in-house agency is handling more of the work in most cases,” it continued. And, most impressively, a third of that cohort kept over 75% of their work in-house.

The ANA said: "For some marketers, traditional agencies are no longer providing the differentiated benefits that marketers want, and both consultants and in-house agencies have grown as a result.”

The trade body said that in the past three years “70% of respondents have moved some established business that used to be handled by an external agency to the in-house agency” – an increase from 56% five years ago.

There were comforting nuggets of information for agencies in the ANA report. For instance, 90% of the participants said they still do some work with external agencies.

“External agencies are still important partners for marketers, even those marketers with in-house capabilities,” the ANA emphasised.

Among the factors that reinforce the traditional model are basic tools (“If the capability and skill sets do not exist in-house, the work goes to an external agency”) and degree of difficulty (“More complex jobs go to an external agency”).

Sourced from ANA; additional content by WARC staff