Bayer saved at least $10 million after taking programmatic in-house

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Two years after Bayer began to bring programmatic buying in-house, the pharmaceutical marketer isn’t looking back.

After stripping out the GroupM agency in the past year, Bayer was able to reduce its programmatic buying costs by $10 to $11 million within the first six weeks, according to Paul Gelb, head of programmatic and social at Bayer. “It is really hard to provide a significant amount of value in an agency today in a programmatic biddable medium,” Gelb said on stage at the Digiday Programmatic Marketing Summit in Austin, Texas, on May 29.

The role of media agencies has been questioned as brands such as Bayer have taken programmatic buying in-house. Typically, because agencies are able to strike deals with platforms and publishers that span multiple clients, they are believed to be able to fetch lower rates through these bulk buys than a brand going it alone.

Agencies “can get rates that are incredibly low compared to what we’d get,” said one marketer in attendance. Whatever money their brand would save from in-housing would not be enough to offset the higher fees they would face without an agency, this person said.

However, that has not been the case for Bayer. With the exception of one unnamed ad tech vendor, the brand has been able to negotiate better pricing with every vendor that it works with compared to what Bayer paid when it had an agency, Gelb said.

While Bayer still works with an agency for its TV buying and continues to work with a creative agency, it is not working with any agencies in digital, other than MightyHive, which Gelb described as the brand’s “transition agency” as Bayer looks to bring all digital media buying in-house by 2020.

At the same time as Bayer has taken programmatic in-house, the brand has seen its overall spending shift pretty dramatically. In 2015, 80% to 90% of Bayer’s advertising budget went to TV. Fast-forward to today: the brand is on the verge of spending more money on programmatic and social advertising than on TV ads, and when Amazon is added to the mix, Bayer is already spending more money on digital than TV, Gelb said.

The money that Bayer has saved by taking programmatic buying in-house can be a tough look for its former media agency. However, MediaCom’s chief digital officer for North America, Steve Carbone, made a case for the agency’s continued role when a brand goes in-house. “We’re not the ones pulling the levers, but we’re still the ones advising,” he said on stage the day after Gelb’s talk. MediaCom clients that have taken programmatic buying in-house “keep our best programmatic people on retainer,” Carbone said without naming any clients in particular.

Agencies’ programmatic talent continues to be their raison d’être as more clients’ look to move programmatic buying in-house and struggle to find employees experienced enough in programmatic. Some marketers that have brought programmatic buying in-house “couldn’t get people to move to their headquarters,” said Oleg Korenfeld, global chief platforms officer at Wavemaker, who joined Carbone on stage.

Recruiting programmatic talent was not a huge challenge for Bayer because its programmatic buying had set up shop in New Jersey where it was easier to recruit veteran executives who had worked for ad tech firms that had been acquired and were looking for positions that offered more work-life balance without a need to commute into New York City, said Gelb. “I don’t see any brand in a major metropolitan area that can’t [successfully bring programmatic buying in-house] if they are willing to hire and well compensate people,” said Gelb.

However, for brands like SafeAuto, convincing such execs to move to Columbus, Ohio, can be more of a challenge. The brand’s in-house programmatic team currently has three open positions and is in search of “people who really want to wear a lot of hats, people who don’t necessarily want that cookie-cutter role,” said Claudia Beale, digital media supervisor at SafeAuto, during a separate session on stage.

This article has been updated to reflect that Bayer saved $10 to $11 million within the first six weeks of stripping out its agency and taking programmatic buying in-house.

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