What marketers must consider before bringing programmatic in-house
The Programmatic Advisory's chief executive, Wayne Blodwell, who will co-chair the judging panel of this year’s Digital Trading Awards, is asking brands if they’re really ready to ‘go in-house’, and has produced a checklist that will better equip them to make such a decision wisely.
The four key considerations include: investment; measurement; talent and tech / The Programmatic Advisory
Programmatic spend now accounts for 70% of all display ad budgets, a short increase in recent years that has been brought on by the promised efficiencies of such uses of adtech, and the dawn of the data-informed marketing era.
This era has also been accompanied by the rise of concerns over the transparency of the use of such technologies and resulted in a number of brands building their own programmatic practices in-house, as many seek to minimize the infamous ‘adtech tax’.
However, given that programmatic, or adtech, is no longer simply a tool to power display media buying (it also incorporates search, social and video ad buys) there are many considerations to take. The Programmatic Advisory has created a checklist of considerations for those looking to do so.
A 100% in-house model may not be appropriate
There are many levels to what could be considered as having an ‘in-house programmatic operation’. Blodwell adds: “We believe in-housing programmatic boils down to how much of the resource and how many of the commercial agreements an advertiser owns themselves in relation to their programmatic activity.”
Advertisers try and plot themselves in one of the eight boxes to understand where they are today (see chart below).
Blodwell goes on to note how “operational resource and contractual relationships” are the two biggest hurdles an advertiser has to overcome to consider taking the leap to becoming “100% in-house”, but he also advises how the myriad of hybrid in-housing models can be made to fit with existing relationships with media agencies.
“We appreciate that things such as planning (media and creative) and analytics are also important but they can be built on top of the technology and commercial foundations and can (and often should) be outsourced,” adds.
Mapping your programmatic aspirations
We recommend advertisers plotting where they are today and where they want to get to. Broadly speaking there are three use cases pre-populated to help:
- Advertisers which today relies on intermediaries to handle all commercial relationships and resource requirements; have the ambition of taking greater control over these relationships but happy with intermediary resource.
- An advertiser which today has one expert in-house, but also manages commercial relationships through an intermediary; although with an ambition of building a team in-house to handle all commercial decisions.
- An advertiser which today does everything through intermediaries; has ambitions and resource to in-house, but wants contracts to be handled by an intermediary (to achieve better rates).
It is estimated that within the programmatic value chain approximately 40% of a marketers' spend that goes into programmatic actually pays for working media (i.e the actual impression to a user), however, creating a programmatic operation is not cheap. “We have cited $20m as the minimum spend threshold for an advertiser to be spending in programmatically enabled channels before considering bringing programmatic in-house - this is so the advertiser can make significant savings on their investment to deliver better marketing performance,” advises Blodwell.
He also advises that minimum performance improvement for undergoing an exercise such as in-housing programmatic should start at 10% - i.e. achieving $2m in savings. This acts as an “investment buffer” for the upfront cost of recruiting talent, plus tech and operational investments. “A brand cannot expect to meet or beat previous goals from day one,” Blodwell further advises.
Furthermore, any marketing team considering in-housing the programmatic operations must “have a mindset which is aligned with execution and accountability, not a mindset which is reliant on partnerships”, according to Blodwell, who also points out that acquiring talent who know how to operate and maximize the use of technologies, including the management of implementational risk and can optimize the performance of media, is imperative.
“It’s important that advertisers are very realistic with themselves on their ability to attract and retain operational talent. Traditionally this sits in major cities of countries, so brands could also create operational hubs which may be detached from the main headquarters,” he adds. “Organizational structure is generally a key consideration for how marketing becomes integrated into overall business and product/service making decisions.”
“Working closely with measurement related stakeholders is a must from day one of an in-housing project as they will likely be responsible for setting your performance and commercial goals on an ongoing basis,” advises Blodwell.
Advertisers also need to ensure they have clear KPI’s for the performance of their programmatic activity, with clearly defined goals around improvements in brand safety, non-human traffic and how effective this has been when combating poor ad placement. This means that measurement should already be in-housed or should have a very robust framework in place via partnerships before considering in-housing programmatic.
It is estimated that 35% of a marketers budget resides in technology, and prior to onboarding any programmatic technology it is crucial to have consistency in “foundational marketing technologies,” such as CRM, an ad server, analytics and attribution technologies, as well as data visualization, tools.
“The need to integrate these programmatic technologies within existing infrastructure and ways of working is crucial to the success of an in-housing project,” Blodwell adds.
“Having technologies which sit disparately and therefore have inconsistent data (eg a difference in cost counting) will lead to major operational burdens… Having consistent foundations globally cannot be understated as these foundations provide the basis of successful programmatic activation.”
These considerations are laid out in the below chart above.
In conclusion, marketers should remember that the decision to in-house programmatic should not solely be a commercial transparency driven decision, although significant efficiencies can be achieved by in-housing programmatic – when done correctly.
“In practical terms, advertisers need to decide whether they see programmatic as a strategic initiative for their marketing ambitions or not. Once they have this they need to map out an in-housing project plan across the four pillars we identified; investment, talent, measurement and technology,” adds Blodwell.
Those advertisers who believe they meet the thresholds set within this document should build out a commercial feasibility study, then decide upon the most suitable operating model for their needs.