In-house agencies aren't new. Most advertisers of any scale have always had some internal production capability and the balance between insourcing and outsourcing has always swung back and forth based on economics, talent availability, and business need. Advances in technologies, particularly the rapid growth of AI now allows internal facilities the capability to greatly widen their creative and production service offerings.

But inflection points happen when internal teams are being asked to own too much creatively. The more deeply an internal team is immersed in the brand, the harder it becomes to bring an outside perspective that keeps creative work from stagnating.

That is the paradox.

The talent equation has changed

Top creative talent used to regard in-house agencies as places where creative has-beens were 'put out to pasture' at the end of their (sometimes glittering) careers with global agency networks. But recent years have seen a number of in-house agencies create really good original work.

What the successful in-house agency gets right

The success of any in-house agency depends on complete clarity of its objectives so stakeholder responsibilities must be well-defined, with detailed hand-offs between creative and production partners agreed prior to engagement as ambiguity inevitably results in chaos.

Sponsorship of the successful in-house agency must come from the very highest level, ie CEO, CFO, CMO, etc, as the agency must be considered the strategic partner to brand marketing rather than simply a supplier, and never be considered as a competitor to the external agencies. Confidence in the partnership should cover briefings between brand marketing and internal agency colleagues, with each feeling empowered enough to challenge the other should briefings not be clear.

Better talent does not cure stagnation

With a limited number of original creative teams, the 'creative stagnation' issue at in-house agencies is a real one. Despite the deep brand knowledge that the internal talent will provide, it is impossible for internal creative teams to constantly remain fresh. Avoidance of creative stagnation needs creative resources from external agency partners and should be utilised when fresh-thinking or specialist creative input is required, and this need should be recognised by the in-house agency. The successful in-house agency often operates as 'conductor' rather than as a 'full-orchestra'.

Finding the right balance between in-house and external

So, what is the optimum split between in-house agency facilities and external agency talent to achieve the best possible quality at the best possible price, and how do we qualify that? The right split depends on the brand as all brands are different. A good source of information may be found at the In House Agency Leaders Club (https://www.ihalc.com), an organisation that regularly invites representatives from internal facilities to seminars and discussion groups, as well as conducting surveys of its members.

Depending on the scale and capabilities of the in-house facility, the larger operations average a rough 70/30 split of internal vs external projects that allows them to partner their ad agencies on Big Bang moments while providing high-volume advertising production requirements, as well as the adaptation work of externally created master material. The ideal viewpoint of brand marketing is that it must maintain the critical importance of all its brand advertising and therefore avoid any conflict of 'above' vs 'below' the line, as there is no longer any 'line' in Marcoms.

The numbers from IHALC support this. 55% of in-house agencies now rate their talent attraction at 8 out of 10, up from 27% in 2023. And 44% now aspire to be their brand's lead agency. However, as in-house teams take on more ambitious work with stronger talent, the creative stagnation risk only increases. The deeper the team goes into the brand, the harder it becomes to maintain the outside perspective that external partners used to provide automatically.

The cost vs quality question

If the in-house agency requires the same headcount, technology, and overhead that was previously carried by external partners, the costs have been relocated rather than reduced. The efficiency question is more precisely whether the work being produced in-house is delivering better value per dollar spent, and whether that value holds up over time as the same team produces more and more of the output.

Production hard costs (crew, talent, locations) are often comparable regardless of who is producing. The real savings with an in-house agency stem from eliminated or reduced agency fees. But the more significant efficiency gain is having an internal team handle the downstream asset work, e-commerce, DOOH, retail promotions, derived from content captured during net-new productions led by the agency-of-record (AOR). That kind of adaptation work rarely excites an external agency, which is naturally inclined toward moving on to the next big campaign idea. And it is precisely the kind of work where in-house teams tend to succeed. In BBS's experience, the strongest in-house agencies are the ones whose work is creatively independent of what the AOR is producing. They have a small and mighty mentality and a realistic sense of where their talents are best showcased. That clarity reinforces the need for in-house capabilities and minimizes any sense of competition with the external agencies.

Finding the right balance

For advertisers working through this question, BBS recommends an honest assessment of what the in-house team does well, where external partners add value that can't be replicated internally, and whether the commercial structure around both is designed to deliver transparency rather than just activity. The 70/30 benchmark is a useful reference point, but the right answer for any given brand depends on the scope of work, the maturity of the internal team, the quality of the external partnerships, and whether someone is looking across the full picture with the advertiser's interest as the priority. An independent production consultant can help frame that evaluation with valuable objectivity as the people closest to the work often have an understandable bias.