The Beast From Within: When Clients Pose A Threat To The Agency

Posted by Ray Kieser, Agency Practice Director on January 19, 2016


There is a growing trend that presents a very real threat for creative agencies, around the internalisation of creativity, where brands are building their own in-house teams. While this can help generate better understanding and a closer working style between agency and client, more often than not it threatens the agencies profitability. Additionally, these teams can often be built from poaching agency staff, further weakening the creative industry. As a result, creative agencies are in a position where they need to fortify themselves against this trend so they don’t become a redundant resource.

This issue was highlighted in a recent report by ClickZ and Deltek and then again at a BIMA breakfast where attendees discussed how to maximise profits without compromising creativity.  Those surveyed for the report noted that soaring costs and reduced budgets, combined with an annual influx of new graduates and slow economic recovery in some sectors, meant that developing an in-house team is an attractive proposition for financially fraught organisations. Additionally, one attendee at the breakfast mentioned his agency had experienced a shift with some projects being taken in-house and a number of staff recently departing to work with big-name clients.

“We believe in collaborating right through the service chain, from developing the initial strategy to pushing the pixels live, but when entire chunks of our business disappear, revenue disappears and with it, profitability.”

The report also identified a potential reason brands were moving teams in house with one respondent stating that “clients are recruiting in-house so that they can ensure 24/7 availability of the skill sets they need, rather than receiving set time from an agency”. This reflects the BIMA discussion where attendees questioned whether agencies acted quickly enough and were responsive to clients’ needs. The general agreement was that they do not and were not but none-the-less, it went some way into providing insight into the reason this trend was gaining momentum.

Additionally, if you consider annual recruitment and retention costs in the advertising and marketing industry cost upwards of £180 million and each new employee takes on average five to seven months to get fully up to speed (IPA), it becomes quite obvious as to why poaching staff creates frustration and problems for creative agencies.

So while agencies can’t prevent clients from internalising design functions, they can make efforts to stop their talent moving in the same direction. In most cases this battle is fought with culture; agencies pride themselves on their culture and more often than not, it is a key reason employees chose a certain company.

However, in order to ensure creative agencies have enough time to focus on strengthening the culture and reinforcing teams, it is important to cover off basic agency management effectively and efficiently. One way to do this is to implement an agency management solution to empower your agency, manage client relationships, provide accurate insight into resourcing and team capacity, effectively manage all financial aspects and enable creatives to do what they do best – be creative, not become bogged down completing arduous timesheets with data-intensive software.

Looking forward and there is an expectation that the trend of brands building in-house teams will only continue as agencies are slowly squeezed out. Therefore, it is up to agencies to defend their territory, proving to brands that there is a reason creative agencies exist and ensuring the existence of the industry in the future. Creating a unique culture, and finding and retaining creative talent is core to an agencies success and this can only be done if the general operations and business of the agency is running smoothly. The agency that finds the balance between the two is the one most likely to succeed. 

To continue the conversation you can leave a comment on this blog or head over to Twitter and have your say using #AgencyThreat