Moving Programmatic In-House with The Programmatic Advisory
Moving Programmatic In-House is currently a frequent talking point for marketers at all levels of spend. According to IAB research, of the 614 brands surveyed across the EU, 86% of them had either completely or partially in-housed programmatic buying.
Why Are Brands Taking Programmatic In-House?
Firstly, advertisers are in-housing programmatic to reduce cost. The largest opportunity to reduce cost is in agency resource. The model used by agencies to charge advertisers varies but in extreme cases, some undisclosed models have taken up to 90% of media spend.
Of course in this new era of transparency, extreme cases like these are largely a thing of the past. However, for advertisers with large budgets, even single figure percentages can be costly.
Media buying isn’t the only opportunity for cost-saving. For example, Unilever saved more than €500m (£430m) on marketing last year (2018) as it said it created “more content in-house while making existing assets go further”.
Secondly, moving programmatic in-house effectively allows brands to get closer to the huge amount of data generated from programmatic platforms. This is important for brands that are looking for further insight into the performance of their media, performance of their data and consumer behaviours.
Moreover, it also allows a brand to get closer to the activation of its first-party data. Some advertisers are fortunate enough to sit on a large amount of first-party data. Advertisers in industries such as Telecoms, eCommerce and Gaming typically either own a sizeable part of the consumer purchase journey or products that consumers regularly engage with.
For these marketers, it allows them to activate their data with agility. In short, it also allows them to have more control over how it is being used. Under GDPR and similar legislation, it is even more important that brands understand who is collecting and processing their customer data. Ultimately, in-housing can provide greater insight on where and how that data is being used.
Marketers typically have multiple costs when running media activity such as technology and media agency resource. If they could reduce these costs, while hitting the same goals, their media buying will become more efficient. Alternatively, the advertiser could simply see an increase in performance against their KPIs that outweigh the costs of in-housing.
Telecoms brands such as Vodafone have a wealth of rich first-party data. They saw an in-housing opportunity that could generate efficiencies in media buying. They decided to bring their biddable media in-house and saw an initial improvement of 10-15% in media effectiveness.
Brands like Vodafone have a good opportunity to in-house their media buying as they have the scale to leverage economies of scale. In other words, they are in a good position to negotiate low tech fees with suppliers. They are also a global brand that can attract the talent needed to operate these channels in-house.
ISBA and PWC released a study on this that highlighted the complexities of the media supply chain. The study reported that on average, 15% of media spend is often unaccounted for.
Beware that some fees, such as SSP take rates, can be difficult to measure on the buy-side. However, there are still a large proportion of advertisers that don’t know what they are spending on technology, data, brand safety and inventory.
Some marketers see in-housing as an effective way to better understand the media supply chain. Ultimately, buying internally and removing stakeholders from the process can show advertisers exactly what they are paying for at a granular level.
Finally, another motivation for some marketers to in-house is to focus on buying teams on internal business objectives. There is an argument that external buying teams need to balance both client performance and internal revenue goals. In-housing would allow programmatic buyers to focus solely on the advertiser’s marketing and business objectives. As a result, drive greater performance.
What Needs to be Considered to In-House Effectively?
In-housing is not a binary decision because there are varying levels of in-housing that can be achieved. For instance, some advertisers simply want to own their technology contracts while others operate their buying.
There are four key areas of consideration when planning to in-house programmatic advertising, regardless of the level. These are; Investment, Talent, Measurement and Technology. The importance of each will depend on the specific use cases of the advertiser.
In the following section, we have listed the key questions that marketers should be considering.
- Are you spending enough on programmatic to take advantage of better technology rates?
- Are you spending enough to justify hiring internal resource with coverage?
- What are the expected savings to be made at a low, medium and high estimation?
- Is your investment in programmatic likely to change significantly in the future?
- What expertise currently exists within the business?
- Are you able to attract talent? Where are you located?
- Are you aware of the cost of key roles? How does it compare to your budget?
- How do you plan to retain talent?
- Should any roles remain outsourced?
- How are you measuring the success of in-housing? What are the specific KPIs?
- Do your KPIs align with your business objectives?
- Is media performance measured accurately?
- Are the correct tools in place to measure media effectively?
- Does your technology stack align with your technology requirements?
- Do you own the contracts to your key technologies?
- Will the operation of programmatic technology be in-housed?
- What is the cost of owning contracts directly? Does it outweigh the benefits?
- How long will it take to procure a new set of technologies?
Based on the considerations above, it is certainly not suitable for every brand to in-house entirely. This has therefore led to the adoption of hybrid operating models. This is where the advertiser takes some of the responsibility of their agency.
How to Start In-housing Programmatic
Define Use Cases and Explore Options
In-housing is not a silver bullet for challenges like a lack of transparency or poor performance. It requires careful planning and works best when executed in stages. For programmatic in particular, it can often be difficult to acquire the talent needed to run successful campaigns at scale.
Additionally, there are alternative solutions that can be cheaper and far easier to execute. For example, operational transparency in media buying doesn’t require the ownership of contracts. Simply gaining access to technologies such as demand-side platforms (DSPs) can achieve it.
However, we have highlighted that there are often strategic reasons for in-housing. In these scenarios, we advise advertisers to break the strategy out into more actionable use cases. For example, gaining greater control in the use of customer data. These can be broken out into use cases that focus on the collection, analysis, segmentation and activation of data.
Analyse Feasibility and Build a Strategy
Once an advertiser has identified in-housing opportunities, they need to assess the feasibility of it. This is typically assessed through a SWOT analysis (strengths, weaknesses, opportunities and threats).
At The Programmatic Advisory, we start this by documenting the requirements for a successful in-housing. Examples of programmatic in-house requirements are to:
- Maintain the ability to be agile in campaign planning and execution.
- Activate all first-party data from digital assets.
- Own technology contracts at competitive rates.
- Overcome technical challenges if they arise.
- Hire and retain staff effectively.
Finally, we use the full list of requirements to analyse if the advertiser is in a strong position or weak position to in-house programmatic. The opportunities and threats project the factors that could affect the project in the long term. For example, the blocking of third-party cookies could impact the advertiser’s ability to activate first-party data.
See our case study on In-Housing Feasibility for a Global Entertainment Brand. The advertiser had a huge amount of unique first-party data and above all, required more control when activating it.
Moving Programmatic In-House with The Programmatic Advisory
The Programmatic Advisory are a strategic programmatic consultancy. We offer impartial advice to advertisers and have worked with some of the world’s leading brands. Our core services empower advertisers in four key areas: Operations, Data, Partnerships and Technology.
Our programmatic in-house services include:
- Operating model construction
- Feasibility analysis
- Creation of an in-house road map
- Select and contract with technologies
- Select and contract with publishers
- Privacy compliance
- Transition services
Discover our case studies for more examples of how we have constructed operating models, assessed the feasibility of in-housing and moved advertisers in-house. We’re delighted to have partnered with fantastic brands and look forward to exploring in-housing opportunities with more.
Contact us today if you are an advertiser that would like to bring programmatic in-house or would like impartial advice on your strategy.