Mid-Year Review: Agencies vs. In-House

We are half-way through the year and many of those in the creative industry and those resourcing for creative talent are assessing whether the expectations of 2019 were on target.  Our discussions with agencies, in-house creative/marketing department managers and HR tells us that we are in a much different place then where we thought we would be at the start of 2019.

To set the scene, we finished out 2018 with the expectation of a massive development and building of in-house creative and marketing agencies/departments for the upcoming 2019.  Many agencies and marketing firms began to unravel or started to lean up.  In-house agencies started scooping up the lead talent to build their internal teams.  This cycle in our estimations has been turning for the last two years.  From Creatives On Call’s perspective the permanent hire portion of our business doubled year over year as corporations drove the demand for good talent within.  It was (and still is) a firm belief that in-house agencies teams were going to replace outside AOR.  Predominate reasoning was that agencies were less relevant to the corporate needs; doubling down the talks that agency costs incurred excessive and bloated pricing structures and disruptor options of online sourcing platforms such as Upworks were compelling arguments for bringing fresh ideas to the corporate table via outside resources.  

In-house agencies believed (and positioned their worth) that they had better insider baseball because they possessed the advantages to obtain highly sensitive information and to stage creative within an incubator like environment.  The talents’ view of agencies vs. corporations was quickly changing as well; and the truth was that corporations did provide better salaries for digital & tech talent, better benefits with job security and better life work balance.  The in-house shop implies a promise for faster speed to completion along with corporate accountability.  The most important in-house factor was that corporations were collecting the freshest talent resources, as in the newest talent (college grads). College grads are firmly turning their backs on the once highly desired cool agency work-lifestyle vibe for corporates coveted life outside of work options and benefits and/or the now viable career choice of gig-work.  

But, (and with a strong emphasis here) the second quarter of this year we’ve seen a distinct flip-flop on the east and west coasts (the Midwest is taking it’s time to revert).  Corporate work is minimizing and in-house shops are trending to lean on agencies again.  It most definitely begs the question as to “why?”.

 I asked both our agency clients and corporate clients what their thoughts were on the change and an interesting list of reasons emerged:

• Corporations had higher expectations of output from the newly expanded internal teams.  It’s tough to get a team to gel in short order – corporate expects it regardless of how difficult it is to accomplish.
• Most In-House departments were built by agency talent that did not “understand” corporate politics and operations.  And they tend to “buck” the systems of corporate.
• Operations (and Finance & HR) realized it was a much easier and quicker boat to turn with an outside AOR over the addition and reduction of staff when costs need to be toggled. 

The largest find that seemed to drive the flip was focused around the feeling of luke-warm success of the hired in-house leadership.  Rule number one that corporations are learning – don’t hire an agency Creative Director as the leader of a corporate creative department.  It’s a tough expectation of a CD to learn the ropes of operations and management.  And ultimately, when they struggle with the operational challenges they lean into and revert to their creative talents as a diversion to the management aspect.  Corporations see a flash of creative drive initially from the CD but once that flame is spent the embers and ashes are not enough to provide the leadership that an in-house department needs.  Counter to these points are those in-house teams that seemed to thrive; and those hands down possessed leadership that was stacked with marketing or operational managers, often blended with past creative industry experience.

The findings that we made were that many of the CD leaders suffered and marketing & operational leaders thrived – all heavily based upon if they could adopt formal process.  Operational leaders are trained and honor the needs of the business; complying generally with accounting, internal billing and procurement rules.  The success of CD leaders was tough –it can be said that their strengths were their weaknesses.  CD leaders were reported to have a tendency to be creative all the time, in such areas as accounting and internal billings.  The creative ideas that did not follow process tested the limits of HR, legal and often times political correctness. 

The outcome of 2018-mid 2019: Many of the CD leaders left the corporate in-house world.  Going back to their roots of agency life was a comfort.   Many agencies are welcoming their alumni back with open arms because with the reunion of ex-corp CDs comes with the creative corporate work that they started when in-house.

Moral of the first part of the 2019 story – what goes up must come down, and around and back up again.  Agencies are picking up speed as corporate expands outside budgets again.

Happy remainder of 2019 to our agency and corporate clients and most importantly the creative talent!