Large companies such as Intel (NASDAQ: INTC) have started creating more of their ads in-house.
Intel recently produced an ad without help from an outside ad agency. The video ad, which featured polar bears in the Arctic, was a smashing success, winning several awards at the Cannes Lions International Festival of Creativity, an international event for those in the creative communications industry.
And it isn't just tech companies getting in on the trend. Cannes CEO Phil Thomas stated that last year there was a 65% increase in the number of contest entries created by brands themselves. Companies such as Procter & Gamble Co. (NYSE: PG), Unilever (NYSE: UL), and JPMorgan Chase & Co. (NYSE: JPM) are starting to invest in their own ad creation teams in an attempt to appeal to ever-growing online audiences.
That is not to say that in-house ad production will outpace outsourced ad creation anytime soon. Outsourcing is still important, especially for high-profile campaigns where a professional team is required to ensure quality and content.
Still, the shift towards in-house ad creation makes perfect sense. Companies are now able to tightly control their digital spending and their data. Tracking ad effectiveness and spending through ROIs can be very tricky because these metrics do not necessarily transfer to direct benefits/new customers and clients. Investing in a centralized creative team can help eliminate any duplicate roles across the company and ad agency. For instance, a social media manager can work for the same company as both a creative and digital agent. Research has shown that a company that spends $2 million annually on digital advertising can save, on average, one quarter of that by cutting out the middleman or ad agency.
But there are drawbacks to producing all ads in-house. It is very hard to find young creative talent willing to work on only one brand and also move to remote locations where many large companies are based. People who create ads like variety, which they can only get if they work for an ad agency rather than the company directly. Thus ad agencies are safe for now, but that may change as more companies adopt the trend.