The number of companies that have started in-house advertising agencies – rather than use an outside ad firm for everything – has grown dramatically in the past five years.

The ANA (Association of National Advertisers) released a survey that reported 78% of marketers are using some form of an in-house team.  That’s a significant increase from five years ago when the number was 58%. This echoes the results of a study done by Forrester reporting in the Wall Street Journal that showed an increase of 50% from a decade ago.

Marketers cited brand and business knowledge as the top reasons for going in-house.

Top Reasons for Using In-House Agencies
Forrester Study

  1. Knowledge of the Brand
  2. Knowledge of the Business
  3. Cost Effectiveness
  4. Speed
  5. Confidentiality
  6. Dedicated Resources

In-house agencies often supplement outside agency marketing efforts to increase quantity and depth of work.  Both studies say the rise in in-house agencies does not pose a threat to the traditional agency

Progressive Insurance is the second largest insurance advertiser behind Geico.  Progressive uses an in-house agency for its marketing.  Procter & Gamble, the world’s largest advertiser announced this year it’s cutting back its agency roster by 50%.  This comes on top of a previous reduction of 60%.  P&G’s CFO Jon Moeller said this will save $400 million by using in-house resources, media buying automation, and open sourcing of creative and production.  He believe it will increase speed to market as well as relevance and quality… while saving money.

Internationally, the trend seems to be along these lines as well.  Research by the World Federation of Advertisers revealed that nearly three-quarters (74%) of brands are reviewing their agency arrangements.  As many as 60% say they want to reduce the dependence on outside agencies.