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Aug 02, 2023

The history of: In-house advertising

Dayna Lang
Author Dayna Lang

In-house advertising is on a meteoric rise. While in-house marketing is nothing new, conducting advertising activities internally has become more accessible and more profitable than ever with new advancements in AI and digital marketing technology.

What is in-house advertising?

In-house advertising is when a brand conducts its marketing activities internally, using the talent and resources of its own organization rather than hiring an agency. By bringing marketing in-house, companies use no or only a select few external personnel to assist with advertising efforts. 

Some organizations may choose to bring several marketing activities in-house while others may only bring one. For instance, a company may conduct digital marketing in-house but partner with an agency for its programmatic efforts. 

In-house advertising has a long and interesting history. The events and technological evolutions that lead us to this point in time tell a story of where the industry has been and helps  predict where it is likely going. 

 

The birth of in-house advertising 

According to Marsha Appel, former SVP at 4A’s Research there were already articles written as early as the 1930’s measuring the benefits and drawbacks of in-house marketing. This was a pivotal moment for in-house, a time when increased discussion signalled increased interest. 

In the early 1900’s brands typically paid a 15% commission to advertising agencies that would place ads on their behalf. This would be an agency’s primary income. The brand was also responsible for covering 100% of media cost to make the creative. 

This typically played out as such: the brand would pay an agency 100% of the necessary costs, with the agency paying 85% to have the creative made and keeping the 15% they were owed for their services. 

There were, of course, efforts made by brands to circumvent this system and find new ways to save money – namely, efforts to conduct some of this work in-house. In response to these efforts, the American Newspaper Publishers Association, Associated Business Papers, and other media associations began to require all companies fill out applications for recognition as an agency. 

Without agency recognition, companies could not receive the commissions they were due. McGraw-Hill Publishing also created its own set rules in 1932. According to these rules, agencies would also need to provide financial information as assurance that they would not rebate their commission to their clients. 

Such rules were designed to explicitly prevent companies from bringing their advertising in-house and to entrench the status quo.

In an article published by Advertising Agency magazine in March 1953, consultant Kenneth Groesbeck stated that “A house agency, of which there are only a few, is really the advertising department of the client masquerading as an advertising agency so it can buy space and time at the discount rates given bona fide agencies.” And so the status quo remained intact. 

When 1956 rolled around, however, opposing measures were put in place. A consent decree signed by the American Association of Advertising Agencies (4A’s) and five media associations barred media from denying the commission to any agency. This made in-house marketing more accessible once again. 

That didn’t, however, mean that brands flocked to the practice as they do today. A 1960  Printers’ Ink article published findings that less than 2% of U.S. advertisers had house agencies. But there was growing interest. 

Interest in in-house advertising was, however, booming. With the same study showing 98% of brands had a demonstrated interest in the practice. 

In-house advertising curiosity continued to see-saw for the rest of the 20th century and into the 2000’s with the real crux of the issue coming to a head in 2008. 

 

The boom of in-house advertising 

With the 2008 recession came the necessity to reevaluate costs and make changes to the way companies conducted their marketing. This renewed waning interest in in-house advertising with a vengeance. 

The ANA found in 2008, that companies at that time taking advantage of in-house marketing most commonly took responsibility for direct mail, internal communications, company videos and brand identity activities. 

This list of responsibilities has only grown with the rise of digital marketing. The list for the 2010’s grew to include new disciplines like social media, paid search, paid social, content creation, and influencer marketing

 

The best and the worst of in-house marketing 

Pros: 

Saving money: 

In-house marketing saves companies money since they no longer need to pay commission to an agency. 

Full control: 

Conducting marketing in-house gives a brand full control over every step of the process and lets them maximize assets while making course correction easier with a clear and simplified chain of command. 

Full institutional knowledge:

In-house teams have the advantage of hands-on, entrenched knowledge of company culture, brand identity, and product capability. 

 

Cons: 

Loss of objectivity: 

Alongside the entrenchment of knowledge comes a lack of objectivity. Sometimes in-house teams can be too close to the brand to be able to see new perspectives. 

Restricted talent pool:

Bringing talent in-house means limiting your talent pool. By using agencies and freelancers, companies are better able to access new talent on a regular basis. 

 

Where is in-house marketing today?

Today, in-house marketing is not only thriving, but expanding. Alongside taking over facets of biddable digital marketing  (like paid search and social), brands are now looking to bring all biddable media in-house, including programmatic advertising. 

With so many organizations exploring how they can take their in-house programmatic further, this transformation is set to grow and take center stage in the next few years. 

Bringing programmatic in-house alongside content, social, and digital advertising gives companies holistic control over their messaging and direction. It gives them the opportunity to take the reins and steer their brand as is needed to achieve success. 

The path of in-house advertising has had twists and turns. It has been tested, restricted, and almost eliminated entirely – only to bounce back better and stronger than ever. While the future is never set in stone, one thing is certain: the future of in-house advertising is guaranteed  to be exciting.

 

To see more from illumin, be sure to follow us on Twitter and LinkedIn where we share interesting news and insights from the worlds of ad tech and advertising.

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