The Big Debate: Is In-Housing Dead?

Jeremy Haft, Chief Revenue Officer, Digital Remedy argues that the traditional approach of in-house ad tech services is impractical and insufficient to succeed in the dynamic contemporary digital ecosystem.

In short: It’s probably not. But as voices around the digital media industry have been telling us, how businesses approach in-housing is changing. It’s becoming rarer and rarer to hear about brands aiming to bring all functions of their ad tech stacks inside. That’s good because managed tech services deliver significant value to the ad marketplace. If a business wants to replace one of its partners with an in-house solution, it should have a real, practical purpose.

Over the last several years, industry leaders have found that building out all primary ad tech functions internally isn’t just daunting – it’s effectively impossible. Today’s digital marketplace is too complex to strategize exclusively for self-service. Specialized tech partners are better suited to navigate that complexity.

There’s a dire need for quality service in ad tech, and that service is becoming increasingly a priority for businesses. A specialized partnership is more important than ever in this current landscape – with myriad digital channels, rapidly changing industry protocol and new regulations around data. It helps ensure optimal campaign performance while preserving the business’s bottom line. And the choices brands and agencies make to ensure success today show they agree. 

This Isn’t the Same Old Programmatic Marketplace

The reasons why the in-housing trend began are straightforward. As the programmatic market emerged, so did third-party services to guide advertisers and publishers. But in time, businesses started questioning whether the margins were too high and the services were not high enough in quality to justify the investment. Many companies assumed they could build teams and solutions in-house for better customization and lower costs.

The catch is that the in-housing trend started when in-housing was a much easier and more cost-effective proposition. Today, it’s not likely that a brand or agency can learn just a bit about each important tech function and expect that’s enough to replicate it on their own. The proliferation of digital channels is difficult for one business to manage effectively. Those channels require specialized knowledge to transact, analyze, measure, and report on. 

Countless Interlocking Pieces To Oversee

A decade ago, we might have been able to think of “outsourcing” as meaning “one person clicking five different buttons” to manage client services. But today, it’s more like ten people clicking a whole lot of buttons on multiple, distinct platforms – to ensure they’re doing things like maximizing CTV/OTT spend, optimizing social budgets, managing digital out-of-home, avoiding duplicating audiences during attribution, and providing insights that are concise enough to understand real ROI.

It’s too much of a lift in operational cost and human resources for one brand or agency to build and adequately oversee these functions. For brands, agency attrition only increases the burden. With a high-quality managed service, the cost of outsourcing delivers obvious value. 

So, once again, managed services can deliver greater value to businesses than self-service. Specifically, performance-driven managed solutions will take us into the future of the digital marketplace. Otherwise, brands and agencies must figure out how to drive ROI from their in-house solutions that can compete against what specialized managed solutions provide. “Good enough” won’t win against “highest quality.” Businesses looking to in-house tech must seriously consider whether they have the resources to go far beyond “adequate.”

AI Can’t Do All the Heavy Lifting 

Considering the direction so many conversations in the industry have gone over the last several months, you’re probably thinking: Why can’t businesses use AI to tackle some of these challenges? AI does hold promise. But it’s not about to relieve the kinds of headaches brands and agencies are dealing with today. AI may lower the cost of automation, but it still requires a great deal of human oversight, verification, and cross-checking of output and recommendations. 

Innovators must make AI results more consistent, comprehensive, and less prone to inadvertent bias or compliance risk. We should expect this process of optimizing AI tools to play out in years rather than months. In advance of any breakthroughs AI may have in the next five years, companies that want to play ball in the current digital landscape will need managed services by real people.

A Broader View of the Marketplace

Another key benefit of bringing in managed services: You can learn more about the right strategies for a business from the outside than from the inside. We can’t underestimate the value of specialization and customized services. This is one of the top takeaways brands and agencies have gained from the in-housing trend: The skills they wanted to take in-house are too specialized to find all the talent necessary.

Managing first-party data, for example, is a primary focus among brands and agencies, and outsourcing complex data-related tasks is far more efficient than building internal teams. Businesses finding external partners can help them build relationships across the digital ecosystem while recognizing internal teams’ blind spots. 

It’s not as though managed services are replacing in-house teams. Instead, they give in-house teams the ability and flexibility to use a variety of partners that can create synergies in the right structures and ultimately benefit the business’s bottom line amid such digital complexity. Businesses weighing the benefits of in-housing versus outsourcing need to ask themselves: Do they have the internal resources to create the same ROI as a managed-service partner, given the tasks and goals? Industry leaders must look at the best drivers of performance and the best ways to position themselves strategically and competitively in the industry.