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The Rise of the In-House Agency

February, 2020

Rest in peace, AORs. In recent years, many power brands have made the switch to working with their own in-house agencies. Some may have seen this transition coming, others were taken completely by surprise, but the fact remains that this has been shaking up the marketing industry over the past few years.

Brands with different organizational structures and cultures have all taken similar decisions, which means they aren’t doing this on a whim. Why the change, and what does it mean for external agencies? The answers to those questions may be more varied than you think, and the situation may not be as dire as it seems.

The Traditional Agency Model

The relationship between brand and agency has been a long one, and it carried on for many years with more ups than downs. The agency of record, or AOR, was the model that many brands and companies swore by for many years. Having an AOR was like having a one stop shop for all of a client’s advertising and marketing needs.

Going this route offered many advantages to clients. Because there was only one source of creative output, communication was easier. Instead of having multiple agencies and vendors to organize, there was only one. Long-term contracts meant the client-agency relationship could strengthen over time, forming a deeper understanding of a brand’s story and market position through years of work and brand building.

Til Digital Do Us Part

Nothing stays the same forever, and that is true with the relationship between clients and AORs. Traditional advertising methods and platforms started to lose their effectiveness once digital media became widespread. It became tougher to reach consumers as it became more difficult to know where they were online and how to target them effectively. Consumers were being bombarded by messages, and they responded by tuning many of those messages out.

As the digital space became more diverse, so did client needs. Soon, brands and companies stopped relying on just one source for their branding and creative. Specialized and boutique agencies started to pop up, causing disruption in the industry. Different external economic factors mixed with tougher internal expectations caused many brands and companies to feel the pressure and move their marketing efforts internally to cut costs.

The Present and Future of External Agencies

Despite the move to in-house, some agencies still have the ability to survive without making drastic changes. While many brands have moved in-house, there are still some that work with an AOR. Others have found a way to mix and match by using their chosen agency as a preferred partner, but also going in-house or to another agency for certain projects. For global agencies, the reputations they have built over the years gives them an advantage when it’s time to weather the storm.

Agencies that know how to be flexible can roll with the punches thrown in the industry. A large part of the reason brands shifted towards in-house was agencies were too rigid. Consumers changed and agencies didn’t. The future for independent agencies will be to have more relevant services that benefit clients and consumers, and of course to be adaptable.

But another key for the future is speed. Here at 121, we like to look at ourselves as an in-house agency. Our knowledge of brands and communication through our on-site model allows us to operate in a way that makes clients feel like we are right outside the door by closing the distance gap with speed. We offer our services without the need for our clients to worry about the overhead of hiring, training, and housing an in-house team. It’s proven successful, and has allowed us to maintain our position within the industry.

Nothing is ever stagnant, and with change comes opportunity. The marketing industry is still reckoning with a shift in-house, and there are some brands that have already shifted back. However, it is likely that for the near future, the AOR will no longer be the lone choice for brands when considering their marketing options. In order to thrive, agencies must be willing to adapt and explore uncharted waters.

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https://support.google.com/adwordspolicy/answer/1316548?hl=en

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We have implemented the following:
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We along with third-party vendors, such as Google use first-party cookies (such as the Google Analytics cookies) and third-party cookies (such as the DoubleClick cookie) or other third-party identifiers together to compile data regarding user interactions with ad impressions, and other ad service functions as they relate to our website.

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http://consumercal.org/california-online-privacy-protection-act-caloppa/#sthash.0FdRbT51.dpuf

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Users can visit our site anonymously
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Contacting Us

If there are any questions regarding this privacy policy you may contact us using the information below.

www.121corp.com
7315 Winsconsin Avenue, Suite 400 W
Bethesda, MD 20814
USA
privacidad@121corp.com

Last Edited on May 25, 2018