Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / CMOs Are Replacing Traditional Agencies with In-House Studios
Transcript
- Lucas: So this week I was looking at Nike's latest annual report, and one number jumped out at me: they now handle roughly 60 percent of their creative and production work in-house, up from maybe 20 percent three years ago. Luna: That's a massive shift for a company that used to be one of the biggest agency spenders in the world — Wieden+Kennedy basically built their brand. Lucas: Exactly. And they're not alone. Over the past eighteen months, I've seen more and more CMOs quietly building internal creative studios — not just for social content or performance creative, but for full-fledged brand campaigns. Luna: What's driving it? Is it purely cost, or is there something else? Lucas: Cost is a big part. Nike estimated they saved about two hundred million dollars annually by bringing production in-house. But there's also speed — when you own the talent and the tools, you can go from brief to asset in days, not weeks. And then there's data ownership; internal teams have direct access to first-party data without an agency layer. Luna: Makes sense. But agencies have pushed back, saying that in-house teams lose creative edge over time — that they become 'corporate' and safe. Lucas: And that's the real tension. The agency model was built on fresh outside perspective — you hire Wieden or Droga5 specifically because they're not you. But when you're paying fifty million dollars a year in agency fees, and you've got generative AI tools that can iterate through concepts in minutes, the value proposition starts to wobble. Luna: So are we seeing agency holding companies panic? Lucas: Quietly, yes. WPP and Omnicom have both mentioned 'client insourcing' as a headwind in earnings calls. Publicis has been more aggressive about spinning up their own internal production units that sit inside client offices — basically becoming the in-house team, but with Publicis oversight. Luna: So the agencies are trying to compete by becoming hybrid — part external partner, part embedded team. Lucas: Right. And some CMOs are going that route. But the pure in-house model is gaining traction, especially among companies with high content velocity — think retail, CPG, entertainment. They need hundreds of assets per week, and the agency markup on volume creative gets hard to justify. Luna: What about quality? I've seen some in-house work that looks really generic. Lucas: It's a real risk. But the best in-house studios are hiring ex-agency talent — creative directors from BBDO, producers from MediaMonks. They're building cultures that mimic agency energy, but with the stability of a single client. And they're using AI to handle the grunt work so the humans can focus on the big ideas. Luna: Give me an example of a company doing it well besides Nike. Lucas: I'd point to Lululemon. They have a team called 'The Studio' — about a hundred and fifty people — that handles everything from campaign creative to in-store signage. They've won actual industry awards. Another is Coca-Cola, which has been rebuilding their internal 'content factory' model after years of relying on agencies. Luna: Coca-Cola used to be the poster child for agency relationships — they had dozens of agencies around the world. Lucas: They did. But now they're centralizing more creative into a hub in Atlanta, and using agencies for what they call 'hero work' — the Super Bowl spots, the global brand campaigns. Everything else is internal. Luna: So it's not all or nothing. It's a split — agencies get the high-profile, high-risk, high-reward work, and in-house handles the volume. Lucas: That's the model a lot of CMOs are settling on. But the split is shifting. Three years ago, the typical ratio was maybe 70-30 agency to in-house. Now I'm seeing 50-50 or even 40-60 in favor of in-house for some brands. Luna: What's the threshold? At what point does it make sense to build an in-house studio? Lucas: I've heard CMOs say that once you're spending more than ten million dollars a year on production, it's worth exploring. Below that, the fixed costs of hiring a creative director, producers, editors, and paying for software licenses can outweigh the savings. Luna: And the tools matter. You need a decent DAM, project management, maybe a creative automation platform. Lucas: Totally. And that's where AI is accelerating the trend. Tools like Runway, Midjourney, and various video-generation platforms let a team of five produce what used to require a team of twenty. So the economics of in-house are getting better even for mid-sized brands. Luna: But what about the agency relationship? If you start pulling work in-house, does that strain the relationship for the work you still need externally? Lucas: It can. Agency people talk about 'the death of a thousand cuts' — every piece of work that goes internal is one less that feeds the agency's overhead. Some CMOs manage it by being transparent: 'Hey, we're building an internal team for social and performance, but we still need you for brand strategy and big ideas.' Others just... stop calling. Luna: And then they wonder why the agency doesn't staff their account with top talent. Lucas: Exactly. There's a trust issue. But I think the smart CMOs are the ones who treat the in-house team as a complement, not a replacement. They use the internal team to build institutional knowledge and speed, and the external agencies for fresh perspective and specialized craft. Luna: So it's a portfolio approach to creative resources, rather than a binary choice. Lucas: Right. And the best CMOs I know are actively managing that portfolio, just like they manage their media mix. They know every dollar spent on an agency has an opportunity cost — could that dollar have built more internal capability? Luna: Which brings us back to the CMO's job: allocation of scarce resources. Lucas: Always. And if you think about it, the in-house trend is really about reclaiming control over the creative supply chain. For decades, brands handed over their most important asset — their voice — to agencies. Now they're saying, 'We want to own that again.' Luna: It's a big cultural shift. And it puts more pressure on the CMO to be a creative leader, not just a media buyer. Lucas: Hundred percent. You can't just hire an agency and brief them anymore. You have to build a culture, hire creative talent, manage creative egos — it's a different skill set. Luna: Speaking of building something — if these conversations have sparked an idea you've actually used, or made you think differently about your own marketing approach, there's a simple way to keep these episodes ad-free and coming. A couple of dollars a month is genuinely what keeps the lights on here — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: Yeah, it really does make a difference. And we don't run ads, so listener support is what keeps us independent. Luna: Okay, back to the creative shift — I want to ask about the talent side. Where are CMOs finding the people to staff these in-house studios? Lucas: Mostly from agencies. There's been a quiet migration of mid-level creatives and producers from holding companies to brand-side roles. The pitch: better hours, more ownership, and often comparable pay. For senior talent, brands sometimes offer equity or performance bonuses that agencies can't match. Luna: So agencies are losing their best people to their own clients. Lucas: It's a brain drain. And the agencies I talk to are worried about it. They're trying to offer more flexibility, more creative freedom, but it's hard to compete when the client can say 'come work on this brand full-time, no pitching, no new business.' Luna: What about the risk of creative stagnation? If everyone on the team has only worked on one brand for two years, do the ideas start to smell the same? Lucas: It's a real concern. The best in-house studios address it by rotating talent across categories — if you're a CPG company, have your creative team work on a B2B project occasionally. Or bring in freelance creatives for specific campaigns to inject outside thinking. Some even do creative exchanges with non-competing brands. Luna: So you need a system to prevent groupthink. Lucas: Exactly. The CMO has to be intentional about it. The ones who succeed treat their in-house studio like a real creative business — with a culture, a point of view, and a willingness to kill work that isn't good enough, even if it means going back to an agency. Luna: That's a good note to end on. It's not about in-house versus agency — it's about building the best creative engine for your brand, regardless of where the talent sits. Lucas: Well said. And that engine is going to look different for every company. But the trend is clear: more CMOs are choosing to build, not just buy.