In-housing has become one of the most talked about trends in marketing, and programmatic is at the very heart of the story. With almost every brand doing it or at least looking at whether they should be, building up in-house expertise, technology and infrastructure is not just a passing fad, it is here to stay and is gaining momentum.
Last year, a study of US brands by the IAB found that amongst companies investing in programmatic media, 65% were wholly or partially in-housing this aspect of their marketing.
This year, another study by IAB US covering the UK, France, Germany, Italy and Spain, reported an average of 86% of brands in each country had moved their programmatic ad buying function completely or partially in-house. These figures are almost certainly overblown, but they certainly do suggest a very high level of interest in the issue.
Another study, this time by Digiday published this summer, looked at what marketers are taking in-house across the board and found programmatic media buying topped the list at 37% of brands surveyed ahead of creative strategy, production, SEO and social media.
But following a roadmap to an in-housed programmatic future is fraught with risk. For a start, what will work out well for one company, even if it may be like the business that you’re responsible for, may not work for your company at all. You will need to create your own distinct map. In our years working with a huge range of different business types and categories, we have seen many different scenarios or blends of talent, technology, and business objectives.
What suits a digital-born entertainment company will not suit a legacy retailer with a burgeoning omni-channel presence, but with roots still firmly planted on the high street. Broadly speaking though, we are starting to see four main quadrants into which companies with different ambitions for in-housing and ultimately very different business objectives and corporate stories and cultures, will generally fit.
Media buying model matrix
The four general in-housing models that most businesses fall into are:
- Quadrant A (Traditional): Agency Managed – Low Client Control
- Quadrant B (Control and transparency): Agency Managed – High Client Control
- Quadrant C (Ad network): In-house – Low Client Control
- Quadrant D (Hands-on-Keyboards): In-house – High Client Control
As seen in the above matrix, these are either starting points or destinations. Many clients will begin the in-housing journey from a place where most if not all their programmatic sits with agencies and tech partners (Quadrant A). The agency may manage all the relationships. This reflects a pre-data, Twentieth Century model of media service provision. This is where all big brands sat just a few short years ago, and most still do.
Now data is literally the lifeblood of a brand’s business the pressure to journey towards a far higher degree of client control over agency services, perhaps mixed with some elements of in-housing or a complete shift to in-housing is acute.
For example, Brand 1 in the matrix is travelling from a full agency service position to a more tightly controlled agency supply model in which there will be far greater levels of in-house expertise enabling the brand to understand and control what’s happening to a higher degree. An example of this can be seen in how Adidas recently took ownership of its technology contracts, whilst still relying on its agency to execute.
Brand 3 is acquiring some in-house technology elements as well as measurement and analytics but is happy to continue to outsource all its programmatic media buying. This more root and branch reform, where programmatic execution is taken outside of the lead media agency and given to a specialist, can be seen in how Deutsche Telekom took control of its media buying to create a hybrid model.
Meanwhile, Brand 2 is on an epic quest from fully outsourcing to fully in-housing as much as possible. EA is a prime example of a brand that has been on this journey for many years, culminating in taking digital media buying in-house in 2017. Although, two years later it saw the need to bring an agency back into the mix to help.
Then there is Brand 4, a digital-born company that began life with in-house digital marketing capability, but outsourced digital media to ad networks as it grew. But as this model promises “performance” at the expense of transparency, Brand 4 is now seeking to augment existing internal teams to a point where it has fully absorbed most if not all programmatic media requirements. A good example of this is how Booking.com is increasingly in-house on data and media buys, whilst greatly benefiting from a digitally native starting point.
There is no right or wrong side to be on this grid, it is dependent on the advertiser assets and requirement, though most advertisers we have talked to, are striving to move up the grid, increasing control within their chosen operating model.
Choosing your in-housing path
The nature of your business and the level of knowledge you already have in-house is going to have a big influence over where you go next. Digitisation of operations is needed by all businesses but there is a huge difference between legacy companies with long histories and the new generation of digital native brands that are built around technology.
How important it is for your company to own the buying process depends on how close this is to the success of your business; to what degree do your data assets determine your profits. For many businesses, a full in-house approach will not stack up in a cost benefit analysis.
Another factor is the extent to which you can centralise your programmatic at an international level. Global brands can be fairly uniform or vary hugely in terms of their business profile and capability in each market. Those with a relatively uniform international business will want to create a centralised programmatic expertise hub and an international framework for activity.
The emphasis isn’t on dictating or micromanaging what happens in each market. Centralisation actually facilitates flexibility through shared learning and optimisation of data as well as more efficiencies by setting out best practice and enhancing investments across a brand’s territories.
For other international brands, creating a global strategy will be more difficult, at least to start off with. A steady evolution will be needed market-by-market, with a different mix of in-house across regions. It could get complicated.
Businesses with experienced people in-house already will have a good take on the tech supplier market and how technology is evolving. The pace of programmatic tech evolution has been extraordinary, so at least understanding how capabilities will most likely change is important. Acknowledging what you don’t know can be critical to in-housing success.
Your business culture and ability or desire to recruit the right kind of talent is also incredibly important in determining which direction you go in and how far you travel towards in-house control. Recruitment of skilled people in the programmatic space is tough. Because investment in the sector has grown so quickly, there is a shortage of talented programmatic people, especially at a senior level.
Businesses that have always handled programmatic in-house may need to change tack. Even if you’re a DTC brand that has done digital marketing in-house from the word go, you’ll probably come to a point where the scale of investment and complexity of audience requirements means your organically grown teams will struggle.
The stuff you’ve been good at – maybe bottom of the funnel audience activity, isn’t enough. At this point you may need to out-source the top of funnel programmatic brand building activity for a time before ultimately building in that capability. Or you may adopt a permanent mixed model.
At each stage of the in-housing journey, brands will be faced with complex implementation and investment decisions. The potential to take a wrong turn is very real and concerns about blowing millions on useless technology will never be very far away.