Programmatic in-housing: hybrid models let advertisers take control

As the IAB uncovers a trend towards the in-housing of programmatic, Martin Kelly, co-founder and CEO, Infectious Media, argues that agencies will continue to have a role. Originally published in WARC

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A recent report from the Interactive Advertising Bureau (IAB) on programmatic gave further clear evidence of the trend for in-housing among marketers. Of the 119 US-based brand executives surveyed, two-thirds indicated their intention to take greater control and bring more of the process under their own roof.

But any inference that all advertisers are on the same path to full in-housing of programmatic is exposed by other findings in the report. In-housing is an umbrella term and means something different to each company.

 

Outsourced partners

For example, just under a quarter (22%) of those surveyed had no plans to change their current arrangements, and 13% reported they had trialled in-housing but reverted to working with outsourced partners.

The report also highlights the fact that those who are in-housing are doing it in different ways and to varying extents, with just 18% taking full control.

The reality is that bringing your programmatic in-house is far from simple. It is based on a complex technological infrastructure which needs significant investment and resource to make it work. Within the report, the IAB identifies areas such as talent recruitment, organisational buy-in, complex co-ordination of partner contracts and staff training and orientation as reasons why companies avoid this ‘full-bore’ approach.

For those that do go down the in-housing path, the report outlines the extent of the commitment required. To start, there is a need to conduct an internal assessment that evaluates media performance and the potential benefits that in-housing could bring compared with current buying practices. This extends to a full cost-benefit analysis of existing partner relationships versus the investment needed and the potential savings gained.

From that point, the IAB report highlights that at least a full year is required to ramp-up and achieve operational readiness; our experience is that it’s closer to two.

Within this, a focus on data – or “data-centricity” – is essential, bringing people, platforms, partners and processes together to apply audience data as an actionable insight. Not only that, first-, second- and third-party sources all need to be integrated for maximum advertising impact.

There is then the need to establish and plug together a tech stack and the challenge of attracting and retaining the talent to support and grow programmatic capability as it evolves – all of which can be highly-demanding in a business where programmatic isn’t the core offering.

As such, full in-housing will only be the answer for the few. For the many, it’s a case of interrogating each part of the programmatic operating model, identifying where there are internal capabilities that can be strengthened, and also where there is a need to outsource to a trusted partner.

 

Strengthening capabilities

For example, a brand may be strong in data management but doesn’t have the talent or knowledge for programmatic optimisation. Or a brand might have assembled an optimisation team but doesn’t have the resource or publisher relationships team to support them.

Specialist agencies or even consultancies prove their value by delivering individual, modular services that integrate with the advertiser’s own capabilities in a hybrid model. We have worked with Deutsche Telekom in exactly this way, acting as digital transformation consultants within a hybrid arrangement that blends in-house and specialist agency skills.

Gerhard Louw, head of international media management and digital transformation, explains: “As part of Deutsche Telekom’s recent introduction of an innovative and progressive media operating model across its European footprint, the company has appointed Infectious Media as digital media transformation consultants. Infectious Media will consult on the topics of data and technology strategy and set-up to keep the telecoms giant at the forefront of data-driven advertising.”

The strategic approach will vary for each company as they consider how programmatic fits within their broader marketing mix. There is no single, universal blueprint for advertisers to follow when it comes to in-housing.

 

Role of agencies

Underlying the adoption of these various hybrid approaches to programmatic is the fact that agencies need to regain the trust and confidence of clients. This is something echoed in the IAB’s report and also our own research. Having surveyed 250 marketers across the US, UK and APAC, we uncovered the worrying finding that around half (53%) of marketers would go so far as to say agencies are untrustworthy.

In addition, nearly three quarters complained that agencies don’t fully report financial data (74%) or measure campaigns effectively (73%), while two thirds (66%) felt they’ve lost control of their publisher relationships.

But there’s no doubt agencies will continue to play a vital role, with a massive 96% still seeing agencies managing multiple aspects of programmatic advertising in the future.

Ultimately, it’s about control for advertisers and a landscape that is changing rapidly facilitating different operating models. A hybrid approach provides the model to do exactly that.

 

Read the original article by WARC here

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