As brands begin to take more ownership of their data and better understand consumer journeys, arguably, media agencies still have a better view of the overall media landscape. At The Drum Programmatic Punch last month, industry experts from Ctrl Shift, Infectious Media and Beamly debated the pros and cons of taking programmatic data in-house.
In-housing is nothing new. Smaller and local advertisers have been doing it for some time, explained Andy Cocker, chief operating officer and co-founder of international programmatic agency, Infectious Media. However, he explained, what’s changed over the past decade is the increase of new, bigger Fortune 500 companies who are starting to look at which parts of the advertising process they can take control off.
“It's such a fascinating subject area, it transcends programmatic itself,” he insisted. “There are these disruptive changes that are taking place across all industry sectors and it's not just what's happening within our own.
“Look at everything else. It's all about digital transformation and technology driven disruption. It's forcing advertisers and businesses across the globe to organise in new ways and focus around data more.”
Anthony Rhind, chief operating officer of digital agency, Beamly was surprised there hasn’t been more in-housing. Due to the amount that companies have spent on costs that "have been media over the years", he was startled that they haven't built media in-house capabilities to manage that.
He pointed at the sophisticated media negotiating rules of engagement that exist at the likes of Proctor and Gamble. “Given how the focus on digital has changed, it's not unexpected that so much emphasis is given to marketing companies that understand what that investment structure and process looks like.”
What is in-housing?
Where once it may have been a binary decision to hire an agency or work in-house, it's really not like that anymore, suggested Cocker.
“There are infinite shades of grey in between. The shade that works for your business, if some form of in-housing is right for you, is going to be based on your unique circumstances that can be based on how you are organised internally. How do you allocate and set marketing budgets centrally or do you have local marketing teams, do you have digital marketing teams? Are you a digitally native business, are you a more traditional business that's going through a digital transformation and reorganising?
“With any of those things, you might need support on certain aspects. Or you might do it all yourself if you are a digitally native.”
Are brands starting to understand value of programmatic?
Rhind said that while brands are aware of programmatic, they still believe that it’s a type of media. “The pendulum of programmatic has insistently been overly weighted towards audience, the sense of audience buying and the reality is that we as an industry have ignored environment too much. No intelligent marketer ignores environment.”
Rhind further explained that brands are looking at brand safety because of the brand risk of appearing adjacent many to YouTube video content and not wasted money.
“Brand safety is on the agenda because Mr Murdoch has an agenda against the walled gardens. This means that his news companies cover the risk of brands advertising on inappropriate YouTube content.
“That at an industrial level is why we are not relevant, because we don't have enough control. We make stupid mistakes and we don't talk commercial outcomes. We haven’t helped ourselves by the jargon loaded communications and the viable failures of governance.”
Understanding the delivery costs
Brands are increasingly demanding for low commission/lower costs on their ad placements, said Dominic Powers, chief executive officer of Ctrl Shift. Yet the resources to deliver on this demand are scarce, quick to burn out and increasingly becoming more expensive. He asked: “Do brands understand what it costs to deliver what they want?”
Cocker answered that some do, and some don’t. And then there are some that don't want to acknowledge the cost of a transparent operating model. “That's a problem we face a lot in competing against the businesses where it’s apparent that they do have a less transparent operating model than we do,” he said.
“Transparency comes at a price. There is starting to be a distinction between different pricing models for different types of services.”
Will big agency networks cope as more brands continue to in-house?
Most holding groups are heavily involved in media buying, suggested Rhind. In programmatic they've benefited from the alignment of technology contracts with media buying. “That's led to a very global approach of organisations to consolidate those biggest contracts to have leverage on buy side. Then to be able to price lowly on the selling of those services into the pitch side.”
Concluding, Powers said that there isn't a black and white model for in-housing or out-housing. “We won't all lose our jobs instantly,” he insisted “but we have a short amount of time left.”
Cocker, Rhind and Powers were all on the 'In-House Programmatic Pros & Cons' panel at The Drum Programmatic Punch 2018. Register your interest for 2019.
Ctrl Shift were a sponsor of the event.