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Setting up an in-house agency

Over the last several months, the world and our working lives have been turned upside down by the coronavirus. Some say now is not the time to be considering major changes to business as usual, while others are using this moment in time to embrace change.

One thing is for sure, businesses will need to consider how they re-emerge from this shutdown with strong purpose, vision and planning for what comes next. More and more brands around the world are bringing agency capabilities in-house as a strategic answer to reducing external costs and investing in internal capability.

But what does it take to build an in-house agency team? What are the advantages of doing this? And how does one even start?

Establishing an in-house agency is like establishing a start-up business

You need to develop a clear business model identifying the costs, revenue streams, key relationships, suppliers, marketplace and, importantly, the value proposition for the business. A clearly defined strategy and execution roadmap are the two essentials for any new in-house service.

Where to begin?

Before deciding on whether an in-house agency or service is for you, it’s worth conducting an audit of your existing agency relationship(s). Here are a few essential questions to get the ball rolling:

How much do we spend on outsourcing our marketing needs to external agencies?
How well do our agencies know our business, our vision and our requirements?
How effective are our agencies in developing solutions for our business?
Where do the problem-identification and problem-solving expertise lie right now (internally or externally)?
What skills or people could we develop in-house?
When was the last time we audited the effectiveness of our agency roster?
Are we receiving the level of service adequate for our needs?
Do our agencies fit in with our growth plans? How so?

What problem are you trying to solve?

Creating an in-house agency team is, at its core, about internalising your solutions capability. Where once you may have outsourced that responsibility, your business now feels the art of problem-solving is something that can be achieved by your own team of experts. There are four critical success factors to consider here:

Empowerment: the business is prepared to back their own staff
Trust: the business trusts the ability, experience, skill and vision of an internal team to deliver the outcomes the business requires.
Responsibility: the business assumes responsibility for generating the ideas and solutions that will provide a competitive advantage and future growth.
Accountability: the business develops accountability measures either at a business or department level.

Businesses should have a clear reason for going in-house

Many businesses respond to their always-on needs by rapidly building internal teams without developing a clear strategy or roadmap for the team. This is a common problem and one that can often come back and haunt the business as strategies or objectives change.

Creating an internal agency, or an agency function requires long-term thinking and planning otherwise the investment will not see a return for a long time, if at all.

How can this team develop a new value for the business and what is the innovation path for growth that this new team will lead or support?

GETTING THE FOUNDATIONS RIGHT

There are some critical questions that need to be asked before your business starts building an in-house agency or function:

Next steps

Determining what functions your in-house agency will be responsible for usually depends on what the greatest business needs are: reducing external costs, increasing volume of content production, improving marketing agility and responsiveness or building expertise in-house.

There is a natural tendency to consider cost savings as a primary driver for bringing agency services in-house, but this is a short-term win for the business and your strategy should look beyond year one cost savings to consider long-term and sustainable value creation from your in-house agency or team.

The set-up costs can be a substantial investment, especially at a departmental level, so your strategy needs to include some financial modelling on how this new internal venture can be funded by a cost centre before it can operate profitably on its own accord.

To learn more about setting up an in-house agency, check out Paul Chappell’s whitepaper A Guide to Establishing your In-House Agency.

The views expressed in this article are those of the author and do not necessarily represent the views of My Business.

Paul Chappell Founder and Strategic Partner – Brand + Story

Paul is the Founding Partner of Brand+Story, a creative agency based in Sydney. He also advises businesses on establishing in-house services under an advisory service, Indomo.com.au

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