Originally Published in: Mediatel
September 27th, 2017
Chris Dobson looks at the factors brands should consider before jumping blindly into the deep end with in-house programmatic.
Programmatic continues to thrive – the latest IAB UK/PwC Digital Adspend report forecasts 80-90% of UK digital display advertising will be traded programmatically by 2019.
Driven by concerns over transparency, brand safety, viewability and fraud, many of the world’s biggest brands are rethinking their programmatic strategies.
New research from the World Federation of Advertisers (WFA) reveals that in the past 12 months alone, 65% of brands have enhanced their internal capabilities, 32% have added data ownership clauses to contracts, and 24% have increased contractual control of programmatic by adopting a hybrid model.
However, some brands are taking this overhaul even further and are considering bringing their entire programmatic stack in-house.
With the promise of increased control over how budgets are spent, a reduction in the proportion of ad spend eaten up by agency fees and tech providers, and better visibility into where ads are placed, it’s easy to see the attraction of this strategy but, in reality, the cost and complexity of taking programmatic in-house means it’s not a viable solution for the majority of brands.
So, what factors do brands need to consider before jumping blindly into the deep end with in-house programmatic?
Cost: More than just a one-off investment
Taking programmatic in-house can be a costly business and isn’t limited to a single capital investment. Even assuming brands invest in their own licence for programmatic technology, this may not be a winning strategy because continuous investment will be necessary to keep up with the constant evolution of the programmatic ecosystem.
To get executive buy-in for in-house programmatic, marketers need to demonstrate that the resulting campaign efficiencies will outweigh the initial and ongoing costs involved, which can be challenging to do.
Wayne Blodwell, CEO of The Programmatic Advisory, suggests brands must be spending at least $20 million programmatically before they even consider taking programmatic in-house in order to generate a high enough level of savings to make the transition worthwhile.
Talent: Recruiting from a limited pool
If brands already have an internal team well versed in other forms of digital advertising, they may feel these individuals can be trained up to operate programmatic technologies, however, this is rarely an effective solution.
The complex nature of programmatic technology requires a unique skillset, combining knowledge of data and analytics with an understanding of human behaviour, so any brand looking to take the technology in-house requires an expert at the helm.
However, the talent pool for programmatic experts is relatively small, with most professionals based at agencies in tech hubs such as London or New York.
Because they are in high demand, experienced programmatic professionals command equally high salaries and may not be willing to relocate to the brand’s headquarters.
Even when a brand has successfully recruited programmatic professionals, investment will be required to keep their knowledge and skills current to compete with the levels of training acquired in a dynamic agency environment.
Complexity: A fragmented ecosystem
Programmatic has become a means of linking all of a brand’s activity through data. It is the technology of the future and brands looking to take programmatic in-house must be mindful not to overlook the intricacy and fragmentation of the ecosystem.
Unlike other forms of digital advertising such as search, the market is not dominated by a single player. Instead there are endless sources of inventory to choose from and numerous demand side partners that can be used to access them. There are also multiple programmatic models to navigate, from open exchanges to private marketplaces.
In addition to programmatic execution, brands will need to consider factors such as planning, analytics and brand safety, which may still need to be outsourced.
The key benefit of bringing programmatic in-house is using a brand’s own first-party data for precise targeting of personalised messaging, and the ability to then measure performance and continually optimise campaigns.
If in-house teams don’t have the ability to manage these processes effectively, the wasted ad spend will negate any efficiencies gained through transparency and control.
Partnerships provide a more effective solution
While it is understandable that brands wanting more control and transparency over programmatic media buying are looking to bring it in-house, the required ongoing investment should not be overlooked.
In addition to the technology itself, this includes the need for highly skilled and in-demand talent who are capable of navigating a fragmented ecosystem.
Instead brands can achieve their goals by adopting a hybrid model where they take control of some elements and outsource others to trusted agencies or tech partners.
By adopting this approach, marketers are free to put resources into areas where they can add more value – such as producing inspiring, disruptive ads that improve the consumer experience, all of which require a very different skill set to programmatic.Follow The Exchange Lab (@exchangelab) and Mediatel (@mediatel) on Twitter.