When Having an Ad Agency Makes Sense and … Doesn’t
The advertising industry is in a period of rapid transformation. While technological breakthroughs impact all industries, they have truly reshaped the entire advertising and marketing landscape.
Chatbots and artificial intelligence enhancements are able to serve as a pathway to generate more reliable leads. Advertising efforts can reach anyone on nearly any device they are using. Robust platforms and dashboards make it easy to launch multi-channel ad campaigns and gather data on the effectiveness of your efforts.
With all of these tools available, many companies are creating their own in-house advertising departments, which is why agency employment has been stagnant or dropping for the last two decades.
Source: AdAge, based upon Bureau of Labor Statistics data
But the decision to hire an agency is not a one-size-fits-all approach. It’s good to have an idea of when an agency can be beneficial and when it won’t be.
The Benefits an Agency Can Bring
An advertising agency can offer many key benefits to your company. These include:
Skill Diversification: They often employ many different specialists (website designers, social media account managers, etc.) meaning that you can access a very broad skill set.
Variety and Creativity: With many advertising employees, your brand may enjoy the benefit of having different creative inputs, often resulting in more effective strategies. Gathering and incorporating different ideas that an in-house team may not bring to the table are very important.
Greater Leverage: Ad agencies spend far more in advertising on the individual channels/platforms than any one company can, which means they can often negotiate better terms and get higher visibility.
Selecting the right media agency for your company is a huge decision, and certainly not one that should be taken lightly.
Agency Alternatives
While there are many reasons why individuals could choose to select an agency or consider alternatives, generally speaking, most companies are foregoing advertising agencies and creating their own advertising departments when they have enough resources to do it effectively.
In-house agencies are on the rise. Under the in-house advertising model, employees work across platforms but are devoted to only one brand. This can cut down on miscommunication and streamline many processes, but in some cases, there is a loss of creativity. It is worth noting that this is not always the case, and some companies have in-house agencies that are renowned for the work that they do, such as Chipotle, Best Buy, and the BBC.
The digital consultancy industry offers another alternative to a traditional agency and the relationships between consultants and their clients can take many forms. They may simply serve as knowledge during the transition to an in-house advertising model or they may be a permanent strategy.
For many, this alternative is attractive because it offers greater control over content and strategies with the knowledge to effectively implement advertising efforts.
In fact a sizeable percentage of in-house agencies agencies rely on outside agency or consultancy help in the areas of digital marketing, research and insight, creative, social media and data and analytics.
The decision to hire an agency, create an in-house solution, or look to a consultant can be a complicated one. The right decision for your business will rely on many factors, which is why it is worth doing a cost-benefit analysis prior to making a final determination.
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