In-housing has found itself back in the spotlight in the early months of 2023. With influential companies recently claiming they’ve saved tens of millions thanks to the strategy, the space is primed to see more client-side initiatives in the months ahead, some experts say. But third-party agencies are also in a more resilient position than in the pre-pandemic days and may have a more meaningful point of differentiation to offer brands that are juggling complicated mandates around first-party data, digital transformation and more. 

Still, the in-housing topic remains a contentious one, as brands vie to wrest control over duties that are typically the bread and butter of outside marketing services providers that may be in a fragile position with the uncertain state of the economy.

“There are voices out there that are threatened by any push toward in-housing,” said Peter Petralia, partner at the marketing consultancy Modern Craft. Modern Craft is a member of the In-House Agency Forum, a trade organization dedicated to in-housing best practices and research.

“This is part of the long-running conversation about the commoditization of agency services generally,” said Petralia, later adding that improved collaboration is also a possibility.

Few companies have had a bigger impact on the in-housing debate than Procter & Gamble (P&G). For years, the packaged goods giant has taken on more media duties and ramped up pressure on external partners to improve efficiency and reduce complexity. As of 2019, the company claimed to have in-housed about 30% of its media planning for an account that controls billions in spend. 

On recent earnings calls and at industry keynotes, P&G executives have again touted the benefits of its approach, stating its fabric care team saw $65 million in savings last year thanks to in-housing and investing more in proprietary algorithms. Forward-facing technology areas like artificial intelligence and data and analytics are joining conventional media tactics in the Cincinnati-based conglomerate’s playbook, forcing agencies to stay on the ball.

“More than ever, we need agency partners to see around corners,” said P&G’s brand chief Marc Pritchard at an Association of National Advertisers conference earlier this month. “We’re finding that we can do more work in-house productively and we can strengthen agency partnerships at the same time to create more value.”

A new groundswell

P&G isn’t alone in stepping up in-housing efforts. Kraft Heinz has continued to grow an internal unit called The Kitchen that debuted in 2020 and focuses on data-driven social campaigns that try to latch onto cultural moments. The team has expanded beyond North America to eight international markets, including Europe, China and Brazil, according to Adweek.  

Of course, not every company is a P&G or a Kraft Heinz, which stand as some of the top CPG advertisers in the world by media spend and own dozens of household brands. 

“They have so much money that they are able to take a long view other companies can't take,” said Petralia.

But broader changes in the marketing landscape are spurring a wide range of marketers to ponder the in-housing question more deeply. The need to acquire and securely manage first-party data is top of the agenda for many with the deprecation of third-party cookies slated for 2024. Similarly, tweaks to iOS have affected mobile strategies in substantive ways, not to mention a proliferation of budding platforms to master.

“If you want to know who or what is responsible for the focus on greater effectiveness, look to Apple, TikTok and any equivalent of the National Bureau of Economic Research,” said Greg Paull, principal at R3, over email. “The impact of privacy, content platforms and economic performance are what's driving marketers to explore how they can increase ownership, control and spend. It's a sign of the times.”

Several years of crises, pandemic-related and otherwise, have also made some companies desire more direct oversight in areas including diversity, equity and inclusion and corporate values messaging, according to Petralia.

“That is a big reason why people are in housing is to take control of their own strategies, to control their own destinies and to be able to ensure that they're able to deliver on the promises that they're making to shareholders and to others,” said Petralia. 

Point of differentiation

Given the nuances of marketing today, in-housing is manifesting in varied forms. Emerging channels like retail media have led some companies to in-house sales and operations, a possible sign the category is reaching fresh levels of maturity. Rounds of tech layoffs and changing labor dynamics are resulting in a potentially richer talent pool for marketers to pick from.  

Traditional marketing fields are also generating renewed in-housing activity. Norwegian Cruise Line in January introduced an in-house creative shop called Rebel Fish Creative Group. Audi earlier this month unveiled Audi RED, or Rapid Experience Development, a North America-focused unit that aims to improve customer experience across the automaker’s digital touchpoints. Audi RED is a joint venture with agency Bimm.

“We're going to see a wave of in-housing fast followers this year. There are enough hybrid models and cases for marketers to confidently jump on the bandwagon,” said Paull. “The challenge will be finding a model that's right for the business.”

With more in-housing bets bubbling to the surface, the level of threat to third-party agencies is unclear. On the one hand, top-line agency performance has held steady and even defied expectations in the face of the pandemic, inflation and other volatility. New business wins jumped 11% for creative and media agencies globally in 2022, according to a recent R3 report. However, the value of that business dropped 35%, a sign that marketers are delegating potentially less significant work to external partners. Some large ad-holding groups have additionally given a cautious 2023 outlook despite otherwise healthy organic revenue growth. 

“Agencies don't have a claim on creativity or innovation,” said Paull. “Ways of working, flexibility, talent and performance count, and agencies will need to answer the fundamental questions of why them and at what price.”

On the other hand, the challenges facing both consumer and business-to-business marketers are steep — and may require a helping hand to navigate. In that respect, some experts believe the large agency networks are doing a better job at pitching their strengths. 

“They're leaning much more into what their differentiator is, which is we have global reach, we have access to data at a scale that you may not have,” said Petralia.

“That's not going to work with P&G, who has huge amounts of data,” he added. “But pretty much anybody smaller than that, many of these ad networks really do have a unique ability to understand what's going on in different customer segments.”