Why external agencies should work to be partners, not rivals

“How will you work with our in-house agency?” This was one of the key questions asked in a recent ad agency pitch request by a major brand.

The ability to collaborate effectively with other creative teams is not a new requirement for ad agencies – in the early days of digital, for example, there was a lot of debate about how well so-called ‘traditional’ agencies could work with the disruptive newcomers. But the emphasis on the IHA-external agency relationship in particular is reflective of changing dynamics and priorities for brands.

This relationship is often couched in adversarial terms – there have been countless articles about the supposed ‘threat’ that IHAs pose and the idea that brands have to choose one or the other. We wanted to examine the view from in-house agencies in our recent IHA Benchmarking Survey, where we asked IHA leaders from 50 major brands to tell us whether they viewed external agencies as competitors, partners or both. Only 2% saw them solely as competitors, with 63% viewing them as partners and 35% as both. Generally, IHA leaders feel they collaborate well with external agencies, with 65% giving themselves a score of seven out of 10 or above on this measure.

What came through was a much more nuanced view of the relationship and how it should work. As one leader said, “It’s not a competition, it’s a partnership where two minds come together to create great work.” Another said that, for a small proportion of work, external agencies “are essential to pull the creative execution to a bigger and better thing than we’re currently capable of.” Most stressed the value of building a strong, collaborative relationship to the benefit of all. And even when there is some rivalry, IHA leaders see the value that can bring. As one said, “The biggest danger in-house is you become complacent, so you need competition to fuel better work and a continued striving to be better. You need and want to win admiration from marketing for creating the best work. This is good for everyone, external agencies who up their game, in-house who are challenging, and marketing who get more choice and better work all round.”

The qualities for which in-house agencies continue to value their external partners should be music to the ears of the latter. ‘Access to skills and talent’ is what IHAs value most from the relationship. Second comes ‘A fresh perspective’ and third ‘expertise in specific sectors’ – surely all offerings that agencies would pride themselves on.

And what kind of work are external agencies doing for these IHAs? Unsurprisingly, above-the-line campaigns are the most commonly-cited task by a distance. Next comes branding and design, then production and experiential. Very few IHAs do their own media planning and buying (just 10-15%). Social and PR come relatively low down, cited by 35% and 37% respectively.

What may give external agencies pause for thought, however, is the stated ambition of IHA leaders to evolve into lead agencies. The survey tells us that most IHAs expect to be doing considerably more Tier 1 (ie work that require creative origination from a brief) in the coming year and that 67% think that conceptual creative teams will be the role that will be most in demand in the next 12 months.

But it is not inevitable that, as they mature, in-house agencies take on responsibility for more and more types of work. As it grew, the LEGO Agency, for example, decided to outsource a lot of its lower-tier work, making the judgement that its skills and resources were better focussed further upstream on helping solve strategic business problems. Under the leadership of Robbie Black, M&S Food has built a reputation for creating popular content that has proved to be highly effective. But Black told IHALC that he shies away from calling his team an ‘in-house agency’ at all and has no permanent staff of creatives, relying instead on trusted freelancers. Not only is there just one, single model for the modern IHA, but those various models are constantly in flux, responding to the changing needs of the business and consumers.

From the responses, we also saw where sources of tension arise. One told us that “[external agencies] make great partners but they will jump on any other work they can get their hands on and can be quite sly about doing so. I find myself constantly policing the use of agencies that find their way in through the back door.” Another said that, “Naturally, to build a good agency or in-house culture to produce a high level of creative work you need a competitive spirit, but the external agency don’t want this, so there can be some conflict. They don’t want to pitch against, or have their work reviewed by, another agency, especially if it’s the in-house agency. Also In-House Agencies have enough clients to manage and don’t want to have an external agency as a stakeholder in work. It adds too many layers and doesn’t make for a good relationship or better work. The key for us so far has been to be very clear up-front, on each brief, what each agency’s role is, and agreeing who is the Lead Agency on that brief. It means as an In-House Agency you sometimes have to bite your lip and roll over to keep the peace. But it also means external agencies have to change their approach and can’t lead on every brief.”

So there is definitely potential for friction, and for both sides to work out the rules of engagement that will get the best results for the business. As one IHA leader told us, “Agencies need to learn to be better friends and make a partnership with the In-House Agency, with a common goal for the good of the brand. If they do this, they will thrive and succeed, otherwise in-house will take everything from them and bring in big-thinking support when it’s needed.”

Download the In-House Agency Leaders Club IHA Benchmarking Survey here