Outsourced or in-house? The debate about how brands should best manage their programmatic advertising remains one of the hottest topics in the ad industry. On the one hand, research from the Association of National Advertisers (ANA) and Forrester has recently revealed that 31 per cent of marketers have increased their in-house capabilities for managing programmatic buying.
In the same week, however, WPP chief executive Martin Sorrell disparaged the idea of advertisers taking programmatic into their own hands. He declared that they were ‘finding it very difficult to do’ and positioned it as a route of last resort for when companies are ‘faced with really very serious economic conditions’.
So who is right? Let’s take a look at the facts of what has actually been happening in the industry. Since 2014, there has been a slow but steady trickle of major advertisers picking the in-house route – brands such as Netflix, P&G, Target, StubHub, Deutsche Telekom, Hotels.com, Kellogg’s, American Express and MoneySupermarket have all revealed that they had developed their own programmatic capabilities.
The ANA research shows that one of the primary reasons for this shift has been advertisers’ increasing frustration at the lack of clarity around the programmatic supply chain and the impact this murkiness is likely to be having on advertising costs, fraud and viewability. A hands-on approach to programmatic is seen as fundamental to bringing control, transparency and efficiency to programmatic.
The other driver has been the crucial role of data in driving programmatic strategies. As consumers become increasingly more connected through smartphones, PCs and wearable technology, there has been a massive expansion in the number of interactions possible with them. Advertisers are therefore seeing programmatic in-house as a vital step in controlling and owning their own first party data. This is putting them in charge of strategic decisions around its use, making the much more agile in reacting to data insights and enabling them to create seamless experiences for consumers wherever, and whenever, they reach them.
As programmatic budgets grow it is no longer feasible to have it siloed in a black box or trading desk. Brands want to know how their campaigns are managed, planned and executed. Agencies are therefore also starting to look at ways they can work with the in-house trend, rather than against it. Hence last year’s ‘break up’ by Publicis Groupe’s programmatic operation VivaKi, deploying staff across all the media agencies within the group in a bid to extend a more consultative approach that would help brands that were looking to explore the in-house route.
Recent news suggests that this hasn’t worked as well as the agency had hoped, with high staff attrition being cited as the reason. Few in the industry fault Publicis’s move, though. What’s more, it makes absolute sense for agencies and technology companies to work together, bringing their own specific skills and expertise to the party, in order to help clients identify the best way to achieve the transparency and control they crave.
However, if only a few advertisers have gone in-house so far, can we say that this is a real trend? Well, the number may be small, but these are mighty brands, representing a significant proportion of global advertising spend - and the number continues to rise steadily. Only last month there were stories in the press about L’Oreal which is developing both its own Data Management Platform (DMP) and trading desk – a move thought by many in the industry to be a precursor to the company bringing the whole programmatic process in-house.
It’s true to say that one CMO’s in-house programmatic can be very different to another’s. For some, having their own ‘hands on keyboards’ via their agency partners is the definition of in-house; for others, in-house means having everything from the DMP and DSP under their own roof and managed by their own staff; alternatively, it can mean contracting with technology providers and having some elements in-house and others outsourced.
The biggest trend, though, is not so much the rate at which organisations are taking control of their own programmatic, or how they are doing it, but the big shift in advertisers’ thinking. The fact that so many more brands are even contemplating in-house programmatic is a huge change compared to three or four years ago. In-house is not going to be right for every brand, as not all will have the skill and resource for dealing with technology, data and analytics, but it’s clear that advertisers are thinking differently about the way they handle programmatic.
As consumers spend increasing amounts of time online, there is no doubt that more brand dollars will follow – and advertisers’ desire to control how and where those dollars are spent will inevitably lead to changes in their own behaviour, with more in-house moves being a likely outcome.
Mike Peralta is chief executive officer at AudienceScience