Are in-house ad agencies choking the talent pipeline?

The following is a guest post by Brian Dolan, CEO of WorkReduce. Opinions are the author’s own.

The advertising industry is experiencing a talent crisis of immense proportions that’s likely to continue unless changes are made now. 

Amid the growing migration from agency to in-house advertising teams, the market has ignored the essential role that agencies have traditionally filled. Agencies have typically been the talent “farms” for our industry. They’ve owned the fundamental role of finding, nurturing and growing entry-level talent across all aspects of the advertising business.

The shift of these responsibilities to in-house brand teams is choking the pool of top advertising talent, making it difficult for both in-house and agency teams to fill open roles with candidates who have the right skill sets.

Leading by example 

In-house ad agencies have been on the rise for more than a decade. Procter & Gamble led the charge by in-housing media to minimize its number of vendor relations and create greater cost efficiencies, with the goal of wresting more control over its brands. It’s a strategy that’s proved successful: Since then, P&G has expanded its in-housing ambitions to other aspects of its advertising operations, and inspired many large brands to follow suit.

As of June 2020, 83% of marketers were managing their marketing mostly or completely in-house, according to a Digiday survey. A successful case is Draftline, a New York-based ad agency created by AB InBev that has quadrupled in size since it was launched two years ago to develop an overarching content strategy for the brewer’s social, digital and outdoor advertising. Now, more hires are on the horizon.

Not every brand has the scale or manpower of a P&G or AB InBev, but their strategies could serve as a model to build off of to achieve a more balanced mix. It’s interesting to note the difference in team structure and division of labor between in-house and traditional agencies, where each can play to their own strength. For example, in-house teams have an advantage over agencies by being much closer to the brand and their customers. This has created a strong data-collection focus for in-house agencies.

Ally Financial, which claims to be 25% more efficient since having taken programmatic in-house, said it wants to understand customer interactions at every touchpoint to determine what project it should be talking about next. And nearly half of the Draftline agency team is charged with gathering consumer data to inform the creative work, not only for the agency, but also its outside partners.

This has opened up the possibility for a number of in-housed brands to begin partnering again with outside agencies, predominantly on a project basis. But even with this hybrid approach, there’s a growing shortage for talent with highly specialized skills, especially in data and analytics.

Skill shortage

Consider the traditional agency structure. Agencies would hire bright young people straight from school, with freshly printed communications degrees. These new agency recruits were trained from scratch to learn all parts of the agency business. They may start with more repetitive tasks from ad trafficking to pulling pacing reports and analytics before being trained in strategic or client-facing aspects of planning and account management.

This would create skilled media planners and strategists who not only understand the data, but also the impact it has on all aspects of the brand. Without this training structure, we have data and analytics teams who lack the contextual experience to make sense of campaign numbers. Additionally, we have bright and eager college graduates who can’t get hired because they don’t have practical experience. 

According to Marketing Week, eight of the most in-demand marketing skills are related to highly specialized expertise including paid social media, ad serving, analytics and social media advertising. Many of these roles require a breadth and depth of knowledge that is in short supply.

This issue isn’t confined to the ad industry. Companies across industries are at risk of missing out on crucial digital transformation opportunities because they lack digital skills, according to a Gartner study. Even more troubling, most companies don’t really understand which skills they need.

Forty-four percent of in-house agencies say they’ve struggled to attract top-tier talent, according to the Association of National Advertisers. Additionally, 79% cited a need to hire more specialty talent related to video, digital, social media and analytics in a survey released last year by the In-House Agency Forum that was conducted with Forrester. 

Given the direction of the industry, wild swings in consumer behavior and rapidly growing software capabilities, it’s clear that the demand for specialized skills will only increase. With the growth of in-house agencies added into the mix, the industry will need to rethink how it finds, trains and recruits the right talent to meet that insatiable need.

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