No sooner had Vodafone announced it would buy most of its online media itself did it stumble on arguably the plan’s most problematic part — programmatic.
No trend summed up the erosion of trust in digital advertising more over the last 12 months more than advertisers wanting to buy more of their own ads: It was the year advertisers thought they could create their own cheaper, faster, better versions of agencies they suspected had spent their money irresponsibly. But being annoyed at agencies is one thing, replacing them is another.
Which is perhaps why it didn’t come as much of a surprise when Vodafone backed down from its plan, realizing that replacing agencies is easier said than done
And it wasn’t the only one. Other advertisers found that costs eclipsed the benefits of taking the work of agencies in-house. Intel scaled back its own in-house Agency Inside team in December after just three years. The team’s remit, which covered most of the company’s efforts outside of broadcast and business-to-business marketing, was condensed as the advertiser consolidated its media buying into Dentsu Aegis Network. More will follow in 2019 as the harsh realities of replacing agencies forces advertisers to think twice about whether it’s worth the hassle.
“Those advertisers that dove headfirst into taking more marketing in-house, with the only aim being the perceived cost efficiencies, have quickly discovered that it’s not as easy as it first appeared. And the value agencies can, and do, bring to the table in terms of access to talent, efficiencies of scale and depth of expertise, is not easily replaced,” says Thomas Byrne, svp of agency services for Dentsu Aegis Network’s Merkle in EMEA.
Here’s the thing: Taking “responsibility” for media buys like this is just a mirage. There are few global advertisers that buy all their own online media because doing so has never been more than a carefully cultivated narrative, one that flies starkly in the face of reality.
When advertisers talk about taking work in-house, many imagine they can do this with a team of one or two people — that simply isn’t possible.
So much so that some advertisers have had to scrap those teams and revert to their agency, as IPG’s CEO Michael Roth pointed out on the holding group’s final earnings call of the year. Those requests are coming up in more pitches now. Laetitia Zinetti, managing principal for media measurement at Ebiquity, says advertisers are asking agencies to suggest ways they would help to bring some advertising in-house in the future.
Even Deutsche Telekom, Nissan and Duracell — three businesses widely regarded as among the more sophisticated media buyers — don’t buy all their own online ads. They do, however, control what gets bought by their agencies and ad tech. Instead of buying their ads, all three advertisers pursued more knowledge, expertise and control of the outcomes of how those ads are bought by their partners. Whether it was Deutsche Telekom moving from a consolidated agency model to a fragmented one focused on specialists partners more attuned to its needs, or Duracell making its own calls on what ad tech to license rather than rely on deals set up by its agency, advertisers started to in-house certain capabilities but work with media agencies as a guide.
“I have learned that as long as you are honest and not too aggressive with your agency that you gain a lot of respect for cleaning up the media buying process towards transparency,” said Jon Ones, head of digital for Duracell’s international markets. “The agency respect you for not being a fool.”
That attitude will likely spread in 2019 as the in-house narrative hits a brick wall, and agencies learn how to make money from advertisers that want to take more control of their investments.
“I support the notion that insourcing is not a binary decision but along a continuum,” says Deutsche Telekom’s head of international media management, Gerhard Louw. “We realized that it is more than developing media strategy ourselves; it is also the responsibility to orchestrate and steer the media operating model.”
The largest gains from in-housing are not always found in media execution, but rather further up the planning cycle in data ownership, strategy and orchestration. Nissan leaned heavily into those areas this year. “The classic agency model is broken but we still need their expertise, which is why we’re overhauling the way we work with them in 2019,” says Nissan’s top marketer in Europe, Jean-Pierre Diernaz. “We don’t need to replace our agencies to understand how our ads perform, but we do need be running all our own data management. That’s the only part we want to take in-house.”