Business Matters: Is the agency model dying? | Blogs

Rachel Birch, Director at House Digital discusses the changes of the agency model.

Business Matters: Is The Agency Model Dying? | Blogs

For many years, the traditional agency model has been adopted and built upon. Historically, businesses have seen their agency as a necessary expense, required to fill gaps in their own knowledge and expertise. But the landscape has changed; in-housing has increased in popularity and companies are now looking for long-term value. So the question is; is the traditional agency model dead?

Business Matters: Is The Agency Model Dying? | Blogs

What happened to the agency model?

Business Matters: Is The Agency Model Dying? | Blogs

Once upon a time, almost everyone stepping into the marketing world used the standard agency model. However, we have seen a major shift in recent years in how agencies and clients interact. According to Ad Age, the average relationship between client and agency has dwindled, from 7.2 years to just under 3. But what’s changed?

Business Matters: Is The Agency Model Dying? | Blogs

The COVID-19 pandemic caused companies to look inward to support themselves, and now, in a post-pandemic world that has rising costs across the board for both companies and working people, it’s becoming increasingly difficult for marketing heads to sell external investment into their boards.

Business Matters: Is The Agency Model Dying? | Blogs

As the need for cost-cutting intensifies for businesses, rising retainer fees is just one of the reasons behind the decrease in the average agency relationship duration. There is a perceived lack of long-term value from agencies, and companies are striving to become more self-sufficient from an internal resource perspective. According to Statista, in 2021, the average UK retainer cost for long-term agency work was £901.50 per month, so for small to medium-sized companies looking to make savings, this is arguably an easy cut to make.

Business Matters: Is The Agency Model Dying? | Blogs

In short, it is no longer seen as a business priority to keep an agency on board.

How did in-housing start and why are companies buying into it?

So, as companies become more inward-looking, and with the ever-rising costs of running a business causing strain, the evolution of the agency model has now moved away from a “We do it for you” approach, to a “We do it with you” model.

In-housing, the process by which an agency provides expert guidance and side-by-side support to their client’s internal marketing team, has revamped the agency/client partnership. It ensures that revenue isn’t just leaving the business as a short-term cost, but instead, a legacy and long-term impact is gained from the investment, as internal business teams learn and develop the skills they need to deliver results for themselves in the long-term.

And just as brands have embraced this new way of working, so have agencies. Agencies that have become bloated while trying to juggle too much for their clients have had to find more streamlined and collaborative ways of working in order to survive. In fact, since 2019, there has been a +7% increase in the amount of in-house agencies on the market. 

In-housing with House Digital

At House Digital, we’re well aware of the changing landscape in the marketing world – it’s precisely why we offer in-housing services to all of our clients.

We have tailored our approach to work alongside businesses and become an extension of their existing teams. We not only provide expert insight and marketing support, we alleviate capacity pressures, plug knowledge gaps and are wholly passionate about helping to create fully agile, high-ability, specialist in-house teams that achieve long term results.

If you’re a company that’s looking for the expert services of an in-house agency that can prioritise your needs and revolutionise your digital presence, contact our team today.

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