Earlier in December 2023, I had breakfast with my colleagues at Olives & Plates in Sandton to celebrate and reflect on the year that was.
One of my colleagues and strategic communications scholar, Tsietsi Mahlasela, reminded me about a research paper he wrote in 2018 about the looming shift from external agencies to in-house public relations (PR).
Fast forward to 2023 he is still more than convinced about this paradigm shift. His statement left me pondering if there is a rationale behind this shift.
Every five years since 2008, the Association of National Advertisers (ANA) has surveyed their members on the topic of in-house agencies. According to the ANA. an in-house agency is a department or group that have responsibilities typically performed by an external advertising agency, marketing agency, or others.
No longer a ‘trend’
According to the latest ANA report titled The Continued Rise of the In-House Agency: 2023 Edition, 82% of ANA members have an in-house agency — up from 78% in 2018, 58% in 2013, and 42% in 2008.
Their prediction is that the penetration will eventually peak at 85 to 90%. In-house agencies should no longer be considered a ‘trend’. They have become firmly entrenched as part of the holistic marketing and communication ecosystem and are now a ‘mainstay’.
For example, in early 2023, Standard Bank reappointed Magna Carta Reputation Management Consultants on a one-year retainer to provide the bank with select PR support, while the bank builds an in-house communication and reputation management agency.
What key factors are driving this shift to in-house PR in South Africa?
- Lack of economic growth: According to Stats SA, Gross Domestic Product (GDP) contracted 0.2% in the three months to end-September in 2023. This means that the economy is not growing but shrinking which can negatively affect businesses and households.
- Cost efficiencies: Lack of business growth leads to cost cutting measures such as reducing marketing and communications budgets, retrenchments etc. According to the latest International Communications Consultancy Organisation (ICCO) World PR Report 2023-2024 the joint top ranked challenge is ‘economic conditions generally’, with 42% of PR leaders ranking it as a top three challenge alongside ‘clients unwilling to commit sufficient funds’, also 42%.
- Big data and analytics: The desire to own, control, and protect first-party data (information collected from your customers) is one of the main drivers to have an in-house agency. Data can be used to tell stories of a brand and craft messaging.
- Institutional knowledge: The different expertise that a company and employees possess. For example, data, skillsets, know-how, values etc. Companies are now leveraging on this as a competitive advantage.
With all that I have highlighted, my view is that there will still be room for external agencies. While external agencies can co-exist with in-house agencies, they bring many benefits such as outside fresh thinking to different organisations and depth of industry expertise.
Going into 2024, organisations and leading brands will continue to outsource certain special projects to external agencies due to capacity constraints and other factors. In-house agencies cannot do everything on their own, but majority of the work will be done in-house and the competition for talent will increase.
Themba Msimango is a Chartered Public Relations Practitioner (CPRP) and guest lecturer.
