All this in-housing has made the talent crisis even worse
Opinion: Career Leaders
Yes, brands and media want to do more with their own data. But now they’re being held back by a severe shortage of the people who can actually make it happen.
In-housing has reached 80% adoption amongst advertisers as brands seek to own more of their media operations, gain greater control of their campaigns, and develop bespoke technology. For a while, it seemed that marketers wanted to move towards a totally in-house model built upon internal agencies complete with creative teams, media buyers, and bespoke technology, but instead what has emerged are various hybrid models.
The reality check for brands has been that there simply isn’t enough available talent to match the specialised skills of technology companies and agencies, and attempts to use in-housing as a cost-savings exercise have resulted in “dashed hopes and disbanded teams.”
Why are so many brands bringing their advertising in-house?
There are many factors that fuelled the in-housing fire: pandemic-accelerated digitisation, increasing content demands, cloud tools empowering internal teams, and the potential to improve efficiency and cut costs. But to truly understand the drive towards bolstering in-house teams, we must look at how data and privacy have shifted priorities across the industry.
The answer is threefold. GDPR and similar legislations around the world, the slow but inevitable demise of third-party cookies, and the opportunities of fostering direct relationships with consumers have pushed brands towards advertising strategies built on first-party data. The consequences of mishandling this data are severe, so brands are holding their cards close to their chest and being more cautious about who they work with.
This level of oversight can be difficult in a digital advertising ecosystem that is notoriously complex and fragmented. By bringing as many advertising functions in-house as possible and having these internal teams liaise directly with carefully selected external partners, brands can retain control over how customer data is used and where it goes, while also cutting waste from their supply chain.
Premium publishers and retailers are taking a similar approach, leading to an increase in direct deals between the buy and sell side, plus closer connections with e-commerce. The result is a digital advertising landscape with multiple independent walled gardens all seeking to attract talent and foster trade that can maximise the value of their first-party data.
However, this desire for independence is being held back by a severe shortage of the people who can actually make it happen.
In-housing dreams clash with the reality of the talent crisis
Handling and analysing data or building and maintaining in-house technology both require highly specialised and in-demand skill sets. The WFA’s Media’s Got Talent? report — which declared that marketing is facing its “worst-ever” talent crisis — highlighted the difficulty advertisers encounter when competing with tech companies for talent, with skilled workers preferring the pace of work and pay packages of the latter.
The situation is particularly dire in the UK. Talent was a key issue at the Advertising Association’s recent annual conference, where it revealed that employment in advertising and marketing was 14% lower than before the pandemic with salary growth trailing behind rival industries, despite rising ad spend.
However, brands could soon find themselves flooded with candidates who have been victims of the tech industry’s massive round of layoffs which, even at 100,000 and counting, may just be the tip of the iceberg by the year’s end. Tech companies are also pulling back on the many perks that once propped up their ‘workplace of the future’ allure, giving opportunities for savvy recruiters to attract talent with the benefits tech workers had become accustomed to. It will be interesting to see whether these mass-redundancies reverse the talent crisis, especially in the UK where Brexit complexities compound recruitment issues.
And even if candidates can be found, assembling in-house data and/or development teams may be significantly more expensive than finding capable off-the-shelf solutions, so unless there is a strong use-case for bringing a role in-house, brands are often better served by specialists in the adtech market. Beneath the surface of the in-housing trend is a diverse array of hybrid setups, with some functions handled internally and others externally.
For example, the IAB found that brands massively pulled back their in-house programmatic trading from 50% in 2021 to just 16% in 2022 as cost and recruitment realities hit home. On the other end of the scale, in-house creative and content teams have been well-stocked, giving brands more say over the creative direction of their campaigns, allowing them to quickly jump on trends they might otherwise miss, and facilitate cross-department collaboration between commercial and marketing teams.
Any prior concerns that agencies would be sidelined have proven to be unfounded. While there will certainly be headaches during this period of change, ‘The State of In-housing 2022’ study found that the in-housing’s current trends have been towards changed rather than reduced roles for agencies. Across agency involvement with marketing operations, flexibility with fees, and control over media deals, respondents were almost equally split between reporting increases and decreases.
Not all ad tech vendors will survive the in-housing transition
The combination of increased in-housing, truncated supply chains, and first-party data strategies has led to brands taking a hands-on approach with their technology partners. Robust and bespoke technical support has become a top priority, and tech partners are expected to help integrate internal and external systems, rather than provide a plug and play experience.
It’s not only technical support that has seen increased demand. Years of frustration around opaque and overhyped adtech have raised serious transparency concerns. ISBA’s famous interrogation of programmatic supply chains rang alarm bells over the difficulty of auditing across multiple vendors. This led to a concerted effort to make it easier for clients to access vital data related to their campaigns, which — according to the follow-up study — is paying off.
As the hybrid in-housing shift continues, adtech intermediaries play a vital role in enabling closer relationships between brands, agencies, and publishers through shared tools such as cookieless identifiers, data marketplaces, and data collaboration. There is a desire for collaboration not just between the parties using such technologies, but also the companies developing them, inspiring a push for standards and interoperability between different platforms.
Looking at the bigger picture for the adtech industry, this period of increased scrutiny from the brands that are taking a more direct approach to advertising is likely to lead to consolidation in overcrowded markets. As brands shop around for solutions that complement their in-house teams, a handful of highly recommended vendors will remain while those that fall short of their increasing needs will collapse or be swallowed.
Alison Harding is VP of data solutions EMEA at global technology company Lotame.
Career Leaders: The Media Leader‘s weekly bulletin with thought leadership, news and analysis dedicated about media careers, training, development and wellbeing.
Sign up for free to ensure you stay up to date every Tuesday.