An in-house internal agency – what is it and is it a good choice for your business?

The agency model is a massive success in the business world.

For proof, just consider Statista’s figures for advertising agencies in the United States. It says that the advertising agency industry alone will be worth $424 billion by 2027. That’s not counting the many other types of agencies out there, such as real estate. All told, this figure represents a 20% increase in the advertising agency industry’s value in 2024.

Over $400 billion.

That rapid growth is fueled by companies like yours.

When you don’t have the in-house expertise to do something – like run a digital marketing campaign – you go to an agency. That agency charges money, often in the form of a monthly fee, and you send work to them.

But what if you flip the script?

Instead of hiring agencies, you build an in-house internal agency into your existing business. You essentially cut out the intermediary and gain more control. However, the cost of going in-house may be larger than you anticipate.

What is an internal agency?

To understand what an in-house internal agency is, you first need to understand what it isn’t.

In the typical agency model, you have a business that provides a specific service to clients. Let’s say the agency works in digital marketing. It will provide digital marketing services such as:

• Web design
• SEO

to multiple clients, each with its own goals. The agency is filled with experts that their clients don’t have. Fees charged go toward access to those experts and the services they provide. Plus, the agency will likely have project management software – perhaps with client portals – to help it manage its client load.

That’s not how an in-house agency operates.

Though an in-house agency does what an equivalent external agency does, the key difference is simple:

It does those things for a party of one.

In other words, the client that uses the agency’s services also owns and operates the internal agency. Thus, it essentially acts as an internal department to the owning company. However, it’s a department that may have some level of autonomy. In some cases, the internal agency’s materials may be directed to outside companies, though this is on a per-project basis.

Internal agency examples

It can often be tough to separate an in-house internal agency from a simple department within a company. That’s especially the case in the marketing sphere – surely an in-house marketing agency is simply a “marketing department?”

Not exactly.

The following two examples provide some insight into how an internal agency functions inside a business.

In-house agency for real estate

Having an in-house real estate agency is exceptionally rare. So rare, in fact, that it’s the domain of extremely large multinational companies that have vested interests in property.

Companies like Microsoft.

Microsoft maintains an in-house real estate agency because it manages hundreds of buildings. These buildings constitute a massive real estate footprint, including warehouses, offices, labs, and many more.

And, as the company points out, managing real estate within Microsoft is a little more complicated than running a standard real estate agency. Its in-house team is responsible for locating viable property, as well as managing purchases and sales. However, it also takes on a logistical component, with transportation and facility operations included. Plus, Microsoft’s internal real estate agency is often tasked with setting up buildings so they’re suitable for work.

In-house agency for marketing

Marketing perhaps provides a better example of an in-house internal agency. Though, like real estate, these types of agencies are often formed by massive enterprises.

One example is BBC Creative.

An in-house agency that works solely for the BBC, it’s responsible for the organization’s marketing and branding. Typically, this involves a lot of the work that a normal advertising agency would do. For instance, its campaign for the “Young Families” TV show involved creating what amounted to banner ads installed on elevators. This is print advertising – a common service offered by external marketing agencies – though it’s tailored to the BBC by an agency it owns.

BBC Creative is also responsible for creating the BBC’s marketing and advertising strategies. Once those strategies are approved, it executes – creating whatever materials are needed for the campaign.

So, why does BBC have its own marketing agency?

The company spends about $5 billion per year producing dozens of new TV shows. Having an in-house agency simply reduces friction. Rather than relying on an external agency to match its fast pace, the BBC can work directly with BBC Creative to develop marketing strategies.

Internal agency creative structure

Operating an internal agency requires using the right tools and software to manage projects effectively and improve communication. These resources boost the agency's productivity and efficiency. Choose tools tailored to your agency's specific needs and workflows, such as Asana, Trello, or Monday.com.

Let’s stick with the creative agency example when examining structure.

An internal agency’s structure usually matches that of an external agency. The agency’s head sits at the top of a hierarchy. Underneath the agency head are departments within the creative team, including Finance, Technology, and Product Design. Collectively, they keep the team running and ensure it has the agency management software it needs.

However, it’s here where you may see the first key difference:

Most in-house internal agency structures lack sales and marketing departments.

The reason being, those departments are practically useless to an in-house agency. The business only serves one client – its parent company. Revisit the BBC Creative example and you’ll see what that means. Rather than having to spend a lot of money on attracting prospects and driving sales, BBC Creative simply waits for its next assignment. That assignment will always come from the BBC – its parent company – meaning sales and marketing aren’t needed.

Returning to the hierarchy, the departments an in-house agency does have will usually be structured in the traditional format. For instance, the Finance department will have accountants and bookkeepers. Product will focus on the creative side, with teams in place for each service the agency offers to its parent company.

It’s all very familiar, barring the lack of sales and marketing.

But let’s zoom back to the top of the structure for a moment. There’s another difference compared to external agencies:

There’s a parent company above the agency head.

In a traditional agency, the head is usually the agency’s owner. While that owner may have a board to answer to – in the case of large agencies – that owner is typically in charge of overseeing strategy. But as with sales and marketing, overall business strategy isn’t a concern for the head of an in-house internal agency. So, above that head will be the parent company, which passes down tasks for the head to manage.

Perhaps you can think of an internal agency’s head as a glorified project manager.

They’re responsible for building strategies and campaigns for the parent company’s products. But they’re unlikely to develop growth strategies for the agency itself. That lack of overriding strategy creation is replaced by the task of liaising with the parent company’s representatives.

Hiring and talent management for an internal agency

Defining roles and skills needed for your internal agency

Start by clearly defining the roles and skills your internal agency requires to meet business goals. Identify core functions such as:

• Project management
• Creative design
• Content creation
• Digital marketing

For example, if your agency focuses on social media campaigns, prioritize hiring a social strategist and content creators with platform-specific expertise.

Assess the current team’s strengths and gaps by mapping existing skills against your agency’s objectives. Use tools like Skills Matrix or Airtable to visualize capabilities and identify where to hire or upskill. This approach helps avoid redundant roles and ensures you invest in talent that drives measurable results.

Focus on building a balanced team with both specialized experts and versatile generalists. This mix allows flexibility in managing diverse projects and adapting to changing priorities. Start with a core team of 3-5 people and expand as your internal agency scales, ensuring each hire aligns with your strategic plan.

Recruiting strategies tailored for internal agencies

Recruiting for an internal agency requires targeted strategies that attract candidates aligned with your company culture and project needs. Use niche job boards like We Work Remotely or Behance for creative roles and LinkedIn Recruiter for marketing and project management positions. These platforms help reach professionals with relevant experience.

Leverage employee referrals and internal talent pools to find candidates who already understand your company’s mission. For example, offering referral bonuses or internal mobility programs can motivate current employees to recommend or transition into agency roles. This reduces onboarding time and improves retention.

Implement a structured interview process that evaluates both technical skills and cultural fit. Incorporate practical assessments, such as portfolio reviews or project simulations, to gauge candidates’ real-world capabilities. This method ensures hires can deliver quality work under your agency’s specific conditions.

Managing and retaining talent within your internal agency

Effective talent management in an internal agency involves clear communication, continuous development, and recognition. Set up regular one-on-one meetings to align individual goals with agency objectives and provide feedback. Tools like 15Five or Lattice can streamline performance tracking and employee engagement.

Invest in ongoing training to keep skills current, especially in fast-evolving fields like digital marketing or design. Encourage attendance at industry webinars, workshops, or certifications such as Google Ads and Adobe Creative Cloud courses. This investment boosts morale and enhances your agency’s competitive edge.

Retain top performers by creating a positive work environment that values creativity and autonomy. Offer flexible work arrangements and opportunities for career growth within the company. Recognize achievements publicly and consider incentive programs tied to project successes to maintain motivation and loyalty.

Best practices for building and managing an internal agency

Establish clear roles and responsibilities

Defining clear roles and responsibilities is essential when building an internal agency. Assigning specific tasks to team members prevents overlap and ensures accountability. For example, designate a project manager to oversee timelines, a creative lead to handle design decisions, and a client liaison to maintain communication.

Using tools like Asana or Monday.com can help map out these roles visually and track progress. In 2024, many small businesses find success by creating role descriptions that include expected deliverables and deadlines. This clarity reduces confusion and streamlines workflows.

To implement this, start by listing all necessary functions your agency must perform, then match your team’s skills to those functions. Regularly revisit roles as your agency grows to adapt to new challenges and opportunities.

Foster a collaborative and transparent culture

Building a strong internal agency culture requires fostering collaboration and transparency. Encourage open communication where team members freely share ideas and feedback. This can be achieved through weekly check-ins or virtual brainstorming sessions using platforms like Slack or Microsoft Teams.

Transparency about project status and challenges helps prevent misunderstandings and builds trust. For instance, using shared dashboards in tools like Trello allows everyone to see real-time updates, which keeps the team aligned and motivated.

To cultivate this culture, lead by example. Share your own progress and challenges openly, and recognize team contributions regularly. This approach creates an environment where creativity and problem-solving thrive.

Implement efficient communication strategies

Effective communication is critical for managing an internal agency. Establishing clear channels for different types of communication prevents information overload. Use email for formal updates, instant messaging for quick questions, and video calls for detailed discussions.

In 2024, many agencies adopt a hybrid communication approach combining asynchronous tools like Loom for recorded messages with synchronous meetings scheduled via Calendly. This flexibility accommodates different working styles and time zones.

To improve communication, set guidelines on response times and preferred tools for each communication type. Regularly solicit feedback on communication effectiveness and adjust strategies accordingly to keep everyone informed and engaged.

Use project management tools to streamline workflows

Project management tools are vital for organizing tasks and deadlines within an internal agency. Platforms like ClickUp, Wrike, or Basecamp help centralize project information, assign tasks, and monitor progress in one place.

For example, setting up task dependencies and automated reminders in these tools ensures that critical steps are completed on time, reducing bottlenecks. In 2024, integrating these platforms with communication tools like Slack enhances efficiency by keeping conversations tied to specific projects.

To get started, choose a tool that fits your team size and complexity of projects. Train your team on best practices for updating statuses and documenting work. This approach increases transparency and helps deliver projects on schedule.

Internal agency advantages and disadvantages

So far, the focus has been on what an in-house internal agency does.

But what about the other side of the coin? These agencies exist because a parent company creates them. The question now is simple – why would a large company decide to create its own agency?

The answer: There are several advantages to this model. But beware! There are also a handful of downsides that might make working with an external agency a better choice.

The advantages

First, the advantages. Why create an in-house agency when external agencies are readily available?

Advantage 1 – More control

Control is the key reason why a parent company will even consider creating an internal agency. They want control over the projects the agency works on, the agency software they use, and the agency’s ultimate output.

And that may not come as a surprise when you realize how many brands aren’t happy with their external agencies.

One survey, which quizzed 106 CMOs, found that only 14% of companies were “highly satisfied” with the services from their marketing agencies. Additionally, 55% were “moderately satisfied,” though “moderate” isn’t the exceptional service many brands expect. Nearly a third (30%) of CMOs were unhappy with their creative agencies.

None of these companies can control how their external agency operates.

They can merely choose whether or not to work with them, creating a trial-and-error process of testing agencies to find one they like.

A company with an in-house internal agency doesn’t have that problem. If it’s not happy with the agency’s output, it has control over strategy and personnel changes to ensure it gets what it needs.

Advantage 2 – Streamlined communication

Let’s assume a company wants to launch a new marketing campaign as soon as possible. If it’s working with an external agency, “as soon as possible,” could take weeks, or even months, to start. Their agency will have other clients – some of which may take priority – making it harder to start a project. And once that project is in play, the company then has to trust that the external agency has appropriate systems for easy communication.

Many don’t.

They may not have client portals in place – making the serviced company feel unimportant – and every request has to go through multiple approval stages.

Again, these issues disappear with an in-house internal agency.

Communication is easier because the agency is part of the organization. They understand the organization’s goals like no external agency can. And, when they receive requests, the internal agency will always prioritize their sole client.

After all, that sole client owns the agency!

Advantage 3 – Higher trust

Trust is a major barrier in the agency world.

Take marketing as an example. Digital marketing expert Neil Patel points out that 80% of company CEOs don’t trust marketers. Perhaps that’s why 69% of businesses admit to having no digital marketing strategy.

The top brass don’t trust an external agency to make one work. However, Patel also points out that CEOs are much more likely to trust internal figures in their businesses, such as CFOs and CIOs.

You see where this is going.

An in-house internal agency will be overseen by an internal figure, such as a chief of marketing. As a result, trust is much higher in the agency, which benefits both the agency and its parent company. The agency can get on with its work without worrying about maintaining its clients. As for the parent company, the trust comes back to the control benefit mentioned earlier:

It’s much easier to trust something when it’s yours.

Advantage 4 – No conflicts of interest

Let’s revisit the BBC Creative example from earlier.

The BBC is a U.K. television network. It has several rivals in that space, including ITV, Channel 4, and Channel 5. Now, imagine that the BBC has identified an external marketing agency that would be perfect for its objectives.

The problem?

That agency currently works with ITV.

Now, there’s a conflict of interest because the agency isn’t going to work with two major television networks. Even if it was willing to do so, there would be a major trust issue – what if materials from one leaked to the other?

With its in-house internal agency, the BBC doesn’t have to worry about these conflicts arising. BBC Creative isn’t going to start creating campaigns for some of the BBC’s biggest competitors. Any work it does – whether for the BBC or another company – has to be approved by the BBC first.

The point is simple:

With an in-house agency, a business can wave goodbye to conflicts of interest.

Advantage 5 – Better data security

Building on the above mention of material leaks, data security is a major concern for any business.

It’s not just leaks related to the company’s marketing strategy that could be problematic. An external agency may have access to sensitive information that needs to be protected at all costs. Again, the BBC provides examples. As a television network, it needs to keep its marketing agency up to speed on TV projects and intended release dates.

If that information comes out before BBC is ready, its rivals could start counterprogramming early.

Now, consider the fact that there were 3,205 data compromises in the U.S. alone last year. Those compromises happen because companies don’t have adequate cybersecurity measures in place.

This leads to an obvious question:

Can a company trust an external agency to take proper precautions with data security?

With an external agency, it can ask about security processes, but it can’t confirm those processes are followed. For some, that means an in-house internal agency with cybersecurity processes the parent company defines and implements is preferable.

The disadvantages

Though the benefits of having an in-house internal agency are clear, they’re not always enough to outweigh the disadvantages. Heading the list is the most obvious drawback to building your own agency.

Disadvantage 1 – The cost

When a company works with an external agency, its costs are clearly defined. The agency will charge either flat fees or hourly rates for different services. All of these can be included in a budget. A company using that agency doesn’t have to manage any additional expenses.

• No hiring
• No salaries
• No equipment or agency software purchasing

No hiring.

No salaries.

No equipment or agency software purchasing.

All of that is handled by the external agency, ultimately making it cheaper than the in-house equivalent. If a business sets up its own agency, it must accept the associated costs. These costs aren’t just monetary. Because the in-house agency is owned by its parent company, the parent must spend time running the agency. Even when tasks are delegated to the agency head, the parent company must oversee them.

Disadvantage 2 – Lack of outsider perspective

The very thing that attracts a business to the concept of an in-house internal agency can also be a major disadvantage.

When you keep everything internal, you fail to invite outside perspectives into your marketing.

The point of an in-house agency is to gain alignment and make processes smoother. The problem arises when there are issues with processes that neither the parent nor its agency identifies. They’re almost too “in sync,” leading to them falling into the same-old, same-old strategies.

An external agency brings a new perspective.

It can take an unbiased look at a company’s marketing strategy and provide insight without worrying about internal politics. That’s not always the case with an in-house team. Sometimes the internal agency is so close to the parent company that it can’t see problems; it’s a “missing the wood for the trees” situation.

Disadvantage 3 – Possible skill limitations

Skill limitations are the leading reason why brands outsource to external agencies in the first place. In fact, 69% of business leaders point to skill gaps as being major problems in their companies.

Building an in-house internal agency is an attempt to fill those gaps.

But there’s no guarantee the attempt will be perfect. Take an in-house marketing team as an example. That team may be primarily focused on traditional marketing, such as print, radio, and TV. The people hired for it are experts in those fields, but the agency’s approach is too narrow.

The parent company wants to move into digital marketing.

The parent company faces a problem. It can hire more talented people—raising costs—to cover the skill gap. Or, it can try to pivot or retrain its existing team to do something it’s not currently capable of. Both approaches cost time and money, with a high possibility something will go wrong.

Those skill limitations aren’t an issue with an external agency.

Companies hire external agencies based on need. If the “traditional” marketing agency used today can’t cover the digital marketing needed tomorrow, that’s no problem. The company just ditches the old agency to move on to a new one.

That’s rarely an option with internal agencies unless the parent company is willing to conduct mass layoffs.

Is an internal agency the right choice?

Prioritize efficient resource allocation even when you have a well-equipped internal team. Previously, we discussed benefits of agency resource management in an in-depth post. Integrating these strategies can significantly boost productivity and job satisfaction within an in-house internal agency.

For a small business, building an in-house agency of any kind is usually a bad decision.

It all comes down to cost.

You’re essentially building a business within your business, which needs constant oversight and investment. Every new hire costs tens of thousands of dollars, reducing your bottom line. That doesn’t include costs of setting up and ensuring the agency has the appropriate business management software.

Going the internal route works better for massive companies. It’s no coincidence that the two examples cited in this article are multinational businesses. They work at such a scale that it might even be cheaper to create an in-house internal agency. Even if that isn’t the case, companies as large as those highlighted here have brands to protect.

Far better to work with an internal agency that understands the brand than an external one that might get things wrong.