Fresh research has indicated that a number of large brands are bringing media-buying in-house and warns that the trend could impact the value of some of the world’s largest holding groups.
During a recent check in with industry contacts, Wall Street equities firm Pivotal Research found that 15 out of the Ad Age 200 marketers appear to have absorbed media purchasing capabilities for one or more business units, taking some functions out of the hands of holding companies.
The trend, which is representative of the US alone, is symptomatic of a “relatively significant escalation” according to analysts, and comes amid the growing proliferation of programmatic buying.
The in-house increase can be nailed down to various factors including a transparency blowback and ad spend restrictions. Concerns from marketers around the former have dominated industry conversation since last year following failures from Facebook and Dentsu Aegis to deliver accurate metrics coupled with the ANA's controversial investigation into agency rebates.
In January, Procter & Gamble’s top marketer Marc Pritchard revealed the FMCG giant is to review all of its agency contracts in 2017 in order to bring transparency to a digital supply chain he described as “murky at best, fraudulent at worst.”
The resulting in-house evolution could come at a cost for companies like IPG, Publicis and WPP according to Pivotal’s report, which claimed that brand marketers handling their own media buys can, in some instances, be led to drive more decision making than might have otherwise occurred taking responsibility away from agencies, and in turn holding groups.
Some agencies have downplayed the impact these models could have. Ruud Wanck, the worldwide chief executive of GroupM Connect said last year he was nonplussed by tech that gives marketers the ability to plan their own media campaigns in real-time using AI rather than human intelligence.
Pivotal did note that many of the advertisers it found to be bringing digital buying in-house continued to work with agencies for related needs, conceding that its previous analysis of the subject had missed the important nuance that marketers who bring work in-house are rarely in a binary internal or agency-serviced mode.
Brands like P&G, Tesco and Airbnb have, or are currently recruiting for, the roles of chief media or digital marketing officers in a bid to better value the media investments they are making.
For Tesco, its appointment of former Mindshare executive Nick Ashley will see it increase internal controls and decision making over media spend, but the brand will still continue to work with its agency Mediacom.
"Overall, the impact of this trend is possibly slightly negative for holding companies because it leads some marketers to drive more decision making than might have otherwise occurred," wrote Brian Wieser, senior analytist at Pivotal and author of the report.
"As time progresses, we expect to hear of more marketers participating in such activities. But at the same time, we also expect that the depth of involvement many of them will have with agencies may expand as well."
Marketers from brands and agencies have questioned how the transparency scandal that rumbled on throughout 2016 will affect traditional media buying models in the coming year. Speaking at The Drum's Programmatic Punch conference last year, The Financial Times’ global head of programmatic Elli Papadaki said consolidation in the space was inevitable.
"It became increasingly complex to work out how to navigate the space and a lot of time has been wasted trying to standardise how viewability, for instance, is measured by one vendor to another and that’s the sort of thing that we’re hearing people getting quite frustrated about. It certainly will come to a head at some point where it should be consolidated and then everyone will be working to the same standards," she asserted.