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I've been reading our CMO's Guide to Programmatic and publishing some highlights here on the blog.

So far, I've touched on challenges of programmatic and the basics of mobile programmatic.

For this post, I've concentrated on the trend of bringing programmatic in house. What's driving it and why?

What does moving programmatic in-house mean?

It can mean contracting directly with technology providers - data management platforms (DMPs), demand-side platforms (DSPs) etc.

For others it involves professional services managed by technology providers, or managed services at an agency level.

Fairly obviously, deciding what approach to take requires an assessment of business capabilities – present and future.

It’s worth noting that ad agencies are not necessarily resistant to the trend for in-housing. Some recognise advertisers’ motivations and are offering a more consultative approach to programmatic.

For example, Publicis Group broke up its programmatic operation Vivaki in 2015, dispersing staff across all media agencies, giving them the ability to help brands looking to explore the in-house route.

The process of in-housing programmatic can be generalised as three steps:

  • Centralising data (an effort to de-silo).
  • Upskilling - businesses must decide if they need to hire experts in strategy, media buyers, or technologists.
  • Allocating resources effectively - are agency or tech partners needed, and in which areas?

In-housing is not black and white. It’s becoming easier for advertisers to play to their strengths, regain some control, whilst utilising external expertise.

house

Benefits of in-house programmatic

1. Control of data 

Organisations may be wary of compromising customer data. By bringing programmatic in-house, advertisers take control of these strategic decisions.

There’s also the issue that agencies can use aggregated insight to help each of their clients.

An advertiser, especially a big one, may not want to share insights, even if this is only in the form of an agency’s total knowledge (as opposed to explicit sharing).

In-housing offers increased visibility of data. Tight integration between the DMP and DSP is achievable in-house, as these technologies can form part of the same platform.

In-housing may also afford some long-term security given that, in the alternative scenario, data used by trading desks and ad servers effectively belongs to the agency of record (AOR) and not the brand. 

So if a brand parts with an agency of record, the agency may retain the insight and much of the data.

2. Transparency in pricing and available inventory

Raluca Efford, Head of Digital and Social Media Marketing at Direct Line, offers some insight on transparency:

Agencies and trading desks have not done a brilliant job of re-establishing clients’ trust. The immediate [client] reaction when they’re not happy is to try and change that. That’s why conversations about in-housing are dominating.

When trading desks were first set up in 2008/09 they were there to enhance transparency for clients.

Since then they have become more and more complex and have become the ‘black box’ technology that they wanted to mitigate against.

Advertisers at scale want to understand margins, floor rates, what inventory is available, etc.

3. Flexibility (agency trading desks can be beholden to tech)

Alongside agencies not necessarily being incentivised to provide value, Paul Cable, Head of Marketing at First Utility, also points out that agencies may be beholden to particular technology.

“Large agency trading desks tend to have in-house or preferred programmatic solutions, which means the primary focus isn’t necessarily on performance.

"This also limits their ability to utilise new innovations and providers, such as the solutions that allow advertisers to target bespoke segments built by second-party data partners that can provide a competitive edge.”

flexible cat

Challenges of in-house programmatic

1. Complex tech infrastructure

Advertisers need to understand the ongoing investment needed in technology, not just to maintain systems, but to integrate new technology as it emerges - which happens fairly quickly in such a burgeoning field.

Lara Izlan, Director of Programmatic Trading and Innovation at AutoTrader, puts forward this point of view"

Recent years have seen a rapid growth of new tools in the programmatic space – with companies offering functionality to solve a myriad of brand new challenges – like fraud, viewability, header bidding, yield optimisation, and many more.

Pressure to adopt these solutions quickly can lead to an ad tech infrastructure that is overly complex.

However, it is worth noting that the IAB is promoting inter-operability of technology, and vendor mergers can also help to bring some of this tech together into single solutions.

Systems integrators such as Accenture and SAP can help, too, outside of agency partners.

2. Finding the right skills 

Outsourcing expertise can be a flexible solution - as the landscape changes, so, too can the expertise.

Though digital teams already have many transferable skills, especially among search advertisers, there is no doubt that a limited talent pool exists in programmatic media.

Businesses need to gauge where to upskill and where to outsource, dependant on structural and financial capability.

The final word 

There are many that are disillusioned with the lack of transparency in programmatic, with one unnamed clientside exec telling our report author that:

...big agencies are trying to push clients back to bulk buying and programmatic guaranteed.

Big media are delivering heavy private marketplaces because of rebates [aka kickbacks] and so we’re back to the position of mainstream media surrounded by a few specialists.

However, it's of course silly to discount agency expertise in third-party data, data science, complex purchases etc.

An alternative service model is emerging, for brands to take advantage of this expertise and own and control more of the data and the tech stack.

Brands are advised to experiment with programmatic, and learn by testing.

Ultimately, those seeking economies of scale may decide to bring more capability in house - in many ways it's a profit-cost analysis.

To learn more, download the CMO's Guide to Programmatic.

Or why not attend Get With the Programmatic, Marketing Week and Econsultancy's one-day conference on 21st September in London, to hear from brand and agency experts.

Ben Davis

Published 14 July, 2016 by Ben Davis @ Econsultancy

Ben Davis is Deputy Editor at Econsultancy. He lives in Manchester, England. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

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Comments (1)

Robert Brill

Robert Brill, Founder and CEO at BrillMedia.co

Agree with the points made here. Programmatic gives marketers control, transparency in pricing and IP, and allows for holistic strategy development more readily when advertising knowledge is owned within the enterprise.

http://brillmedia.co/why-do-marketers-take-their-programmatic-investment-teams-in-house

7 months ago

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