Loading ...Harvard Business School Working Paper
When are advertisers more likely to establish and maintain their own in-house agencies? Despite occasional indications to the contrary, such self-sufficiency has long been viewed by industry observers and scholars as more the exception than the rule in the U.S. advertising and marketing services business. With the background that vertical integration in this industry is a neglected domain of research, analysis by HBS professor emeritus Alvin J. Silk and colleagues suggests that while most large U.S. advertisers rely primarily on independent agencies for advertising services, many other advertisers operate in-house advertising units. Key concepts include:
- The organization of the advertising and marketing services industry is likely to undergo considerable change as it absorbs new communication and information technologies, creating challenges and opportunities for both managers and researchers.
- In the 1990s, almost half of all U.S. advertisers, large and small, operated some form of in-house advertising unit.
- Smaller advertisers and advertisers of technical, creative, or highly differentiated products were more likely to integrate
September 22nd, 2008 at 3:44 pm
It would seem logical that as more individuals acquire the ability to create and publish their own content, agencies would follow suit. It’s interesting that this seems to be what they’re finding.
My thought is that when agencies outsource their advertising, more and more those receiving the outsourced work are using the same tools (or very nearly) as individuals are learning and using themselves, making them ripe for new in-house employees. If everyone has access to the same tools, it would seem far more cost-effective to employ a few people full-time to use those tools in-house rather than continue to outsource.