In-house Programmatic: 8 things to consider12 Sep, 2018 Read Time: 4 Minutes
The decision on whether to in-house your programmatic activity is at the forefront of every client-side marketer's mind.
As its name suggests, in-housing allows brands to internally manage their programmatic advertising strategy and operations, without help from their agencies. Some brands already have internal programmatic teams and operations in place, such as Procter & Gamble, American Express, Unilever, L’Oréal, Lloyds Bank and Netflix.
A recent Adobe market survey found that 86% of brands and 89% of agencies planned to spend more on programmatic ad buying in 2018 - meaning marketers are prioritising greater control of their online media buying. The same survey found that two out of three marketers were planning to bring their programmatic efforts in-house by 2022, and the other third will do so partially. I think it’s safe to say that programmatic will become synonymous with digital advertising in the near future.
This programmatic in-housing trend has risen as a result of the dissatisfaction of brands with programmatic operations (lack of transparency, hidden margins and accuracy on audience data to name a few) carried out by certain agencies. The breaking point was reached in 2015 with the famous ‘Mediapalooza’, the biggest year in media reviews amongst advertisers (with a combined $25B annual global market spend).
As brands look to in-house their programmatic activity, so comes the need to find that right talent to facilitate the activity. Many brands are turning to training providers like Jellyfish Training to ensure their team is at the forefront of programmatic knowledge.
Leaving the transparency issue aside, the main advantage of Programmatic in-housing is, no doubt, the control in terms of costs, processes and operations. In addition, it allows brands to have control of their most valuable asset: their first-party data.
Let’s look at the eight things advertisers need to consider before getting their feet wet with Programmatic in-housing:
Consider what in-housing could look in your company
What’s become apparent is that in-housing is not a one-size-fits-all solution. More importantly, it does not have to mean getting rid of your media agency necessarily, but to have a different kind of relationship with them. In my view, there are three different in-housing models.
- Client owned / client operated: advertiser leads programmatic strategy, owns the tech, data, closes inventory deals and executes
- Client owned / agency operated: advertiser leads programmatic strategy, owns the tech, data, closes inventory deals but media agency executes
- Client owned / agency as consultant & client operated: advertiser & agency lead programmatic strategy, client owns the tech, data, closes inventory deals and client executes
Marketers should explore the options and think about what would work best for their company.
You will need to build media supply chain relationships
Advertisers need to have full visibility of the programmatic supply chain, not only buy-side but also sell-side. That means consolidating all of your media buys through your DSP seat, having only one ad server (yes, sometimes I’ve seen brands with three ad servers) and establish a close relationship with technology vendors (don’t forget SSPs and DMP providers, if you need one, but that’s for another blog post) as well as publishers, not only from a CPM rate perspective but from an audience and data perspective.
Tech fees will be higher
Tech fees will always be higher for a client vs an agency. That’s due to the amount of media spend carried out by an agency. No matter how big your brand is and how much you spend. A big agency network will have a portfolio of hundreds of clients running programmatic campaigns. To give you an example, an advertiser spending £20M a year on programmatic, using an agency trading desk, will see the tech provider take an average 8% fee for the DSP utilisation. If that same amount of media spend is managed in-house the tech provider will charge the advertisers an average of 14%. That represents approximately £1.4M more in tech fees. But on the flip side that’s more than offset by:
- Not paying service fees to the media agencies
- Obtaining better results and more control of campaign performance
- Having a direct, more strategic vendor-client relationship
You'll be moving from variable to fixed costs
Most advertisers have seasonality in terms of media spend, which can fluctuate month by month. This allows media agencies to react ahead of time and allocate the necessary resources according to their media spend, giving you variable costs. When going in-house you’ll have 2, 3, 4 or 10 people working full time on your programmatic campaigns and depending on how much you invest on a month by month basis, you’ll either be under-utilising your staff or be under-staffed which is a fixed cost. Therefore, crunch your numbers very carefully when hiring your programmatic experts!
How are you going to stay at the top of your game?
Digital is fast-moving. Catching up, staying ahead and tuning in to what’s happening in the industry is key. Does Header bidding, domain spoofing or multi-touch attribution sound familiar? If not you'll need to do your research!
The best way to stay up-to-date when you're without agency support is to be avid readers of publications such as Digiday, AdExchanger and ExchangeWire. Keep an eye out for new product releases from Google, and read ThinkwithGoogle case studies.
Finding the right talent
It is not easy to find the best people to manage programmatic campaigns, it continues to be a major challenge across the industry. Programmatic is still the newest kid on the block within digital marketing and therefore talent recruitment will not be easy. The obvious move is to go find these experts sitting in agencies and trading desks but the question is, will they be willing to get immersed in your company and stop being exposed to dozens of advertisers and different verticals?
Let’s not forget about the inventory. As mentioned earlier, given the amount of inventory that an agency buys on behalf of their hundreds of clients, big agency networks have a bigger negotiation power and therefore will get more competitive rates from the Publishers as opposed to coming from advertisers directly. That’s how it is today but I’m sure as this trend evolves, publisher relationship directly with brands will go through changes as well. Other aspects about managing programmatic inventory entitle detecting publisher block lists, negotiating deal priority and troubleshooting Private Market Places.
The little but important stuff
There are other important aspects such as: brand safety, viewability, verification, ad fraud, audience building and data validation and website tagging that need to be taken into account when considering bringing programmatic in-house. It is time-consuming, I’m not going to lie, but it is doable
Ultimately there’s no right or wrong way of doing things, but as we’ve outlined above. There are certain aspects we need to take into account when considering bringing a programmatic team in-house.
We’ve seen ten times more enquiries for in-housing over the last six months compared to 2017, and that's why we have created a training proposition that can be tailored to the exact requirements of a brand or agency. Our training solutions can range from as little as a single day brushing up on a specific product, or multi-month training solutions to empower and build entire teams. Jellyfish Training provides extensive training across the Google Marketing Platform and broader digital disciplines.
If you want to find out how Jellyfish Training can help to bring your in-house team up to the right skill level, contact us on the form at the very bottom of this page.