The in-housing experiment of the late 2010s taught the digital industry an important lesson: running an effective digital agency capability in-house is much harder than it looks. The cost, the talent, the technology, the institutional knowledge — all of it conspires to make building the same capability that specialists have developed over years a deeply difficult and expensive undertaking.
The pendulum has been swinging back. Not all the way — in-house teams remain important for always-on activity, brand governance and first-party data strategy — but the case for partnering with specialist digital agencies has never been stronger. Understanding why, and what a genuinely valuable agency relationship looks like, is increasingly material to competitive advantage.
The In-Housing Experiment Revisited
Between roughly 2015 and 2022, a significant number of large advertisers moved programmatic trading, paid social, SEO and content production in-house. The arguments were compelling: transparency, cost efficiency, data ownership and speed. For some brands, in particular those with large, stable and predictable media spend, the model worked reasonably well.
But for most, the reality was more complicated. In-house teams struggled to match the platform depth of specialist trading desks. They found it hard to attract and retain the best talent, who often preferred the variety and progression opportunities of an agency environment. They were slower to adapt to platform changes, slower to implement new strategies, and prone to the institutional inertia that agencies, by their nature, are forced to overcome every day.
The cost advantages that looked compelling on a spreadsheet eroded quickly once headcount, technology licences, training budgets and management overhead were accounted for. And when performance faltered, there was no agency to hold accountable — only an internal team that was often too embedded in the organisation to be challenged effectively.
What Specialist Agencies Actually Offer
The value proposition of a specialist digital agency in 2026 is different from what it was a decade ago. It's no longer primarily about execution capacity or access to technology. Most brands can buy the technology themselves. What agencies offer that in-house teams cannot easily replicate is:
Pattern recognition across clients. An agency working across ten clients in a given vertical accumulates an understanding of what works that a single brand's in-house team simply cannot develop. They see more tests, more failures, more edge cases. They've had more conversations with platform representatives and been exposed to more beta programmes. That pattern recognition compounds over time.
Talent density. The best agency professionals choose agencies precisely because they offer variety, progression and the company of other experts. The culture of a good digital agency — competitive, intellectually rigorous, performance-oriented — attracts a profile of talent that many in-house environments struggle to retain. When a brand works with a good agency, they get access to people whose careers are defined by expertise in their discipline.
External pressure. An agency relationship, done well, creates a healthy external accountability. The agency sees things the client can't see clearly from the inside. They can raise difficult questions without the political constraints that in-house teams navigate. The best client-agency relationships have this quality of honest challenge that is genuinely valuable.
Speed and flexibility. Agencies can scale up and down in ways that in-house teams cannot. They can deploy specialist capacity for a campaign, a test, a market entry — and then redeploy it elsewhere when it's no longer needed. In a world where business demands change quickly, that flexibility has real value.
"The brands that are pulling ahead aren't those that have built everything in-house or those that have outsourced everything to agencies. It's those that have thought clearly about which capabilities create competitive advantage when owned, and which capabilities are better served by specialists."
The Hybrid Model
The most sophisticated approach to digital capability in 2026 is the hybrid model: in-house ownership of the capabilities that are genuinely strategic — first-party data infrastructure, brand governance, performance measurement, always-on content — combined with specialist agency partnerships for channel execution, strategic counsel and surge capacity.
This model requires more sophisticated client-side digital leadership than the pure in-house or pure outsourced models. Someone needs to manage the agency relationships effectively, evaluate performance rigorously and integrate the agencies' work with the in-house capability. The role of the in-house digital director has evolved from executor to orchestrator.
The brands that are getting this right have invested in building genuine client-side expertise. Not a department that manages agencies, but individuals with enough understanding of each discipline to hold agencies accountable, ask the right questions and integrate insights back into the wider organisation.
What to Look for in an Agency Partner
Several indicators are reliably predictive of whether an agency relationship will generate value:
- Evidenced specialism. The best agencies have a clear and defensible area of expertise. They can show results from clients facing similar challenges to yours. Be sceptical of agencies that claim to be excellent at everything — depth of expertise in a few areas is more valuable than breadth across many.
- Quality of thinking in the pitch. The presentation a good agency gives in a pitch is a reasonable indicator of the thinking quality you'll receive as a client. Are they asking sharp questions? Are they bringing a distinctive point of view? Or are they presenting generic slides with your logo on them?
- The team you'll actually work with. Pay close attention to who will actually run your account versus who presented in the pitch. The two are frequently different, and the former matters more.
- Commercial model alignment. Incentive structures matter. An agency paid purely on retainer has different incentives from one paid partly on performance. Neither is inherently right, but understanding the incentive structure helps you predict behaviour.
- Transparency on data and reporting. The agency should be able to provide clean, accurate reporting that you can independently verify. Any reluctance to share raw data or platform access should be treated as a significant warning sign.
The Next Phase
Looking forward, the agencies that will define the next phase of digital are those that have navigated the AI transition thoughtfully — adopting AI to become more efficient and more capable, without using it as a substitute for genuine strategic thinking. The commodity execution work will increasingly be automated. What remains valuable is the judgment, the creativity, the relationships and the cross-client pattern recognition that genuine expertise provides.
For brands, the implication is clear: invest in your ability to work with agencies well, and be discriminating about which ones you work with. The best agencies are a genuine competitive asset. The mediocre ones are an expensive distraction.
Published February 2026. Based on industry research and practitioner interviews.