For Deutsche Telekom, bringing media in-house is about strategy, not execution.
The shake-up, almost a year in the making, gives marketers at the German telecommunications firm full control over the media strategy for 13 of its sub-brands across Europe. A mix of marketing, sales and procurement executives make up the international team, which will act as the nucleus for the external partners it plans to appoint over the coming months. GroupM will be the first supplier to test Deutsche Telekom’s new model, with the media agency tapped to handle planning and media buying in 11 markets.
Deutsche Telekom’s model, which has been developed in partnership with ID Comms and Mckinsey, also reinforces the control it has over its own data ahead of next May’s data reforms from the European Union. Since 2013, the telecommunications firm has owned the contracts and managed the performance of its ad tech stack, including its ad server, site analytics, demand-side platform and data-management platform.
“Our new media operating model requires a completely new way of working that is dependent on effective collaboration between ourselves and the new suppliers,” said Christian Hahn, vp of marketing, communications, strategy and media at Deutsche Telekom.
Suppliers are broken up into five areas: media strategy and steering; campaign planning and media buying; programmatic operations; search and affiliate marketing; and media analytics.
Keeping the strategy of its media in-house will go some way to easing any internal concerns that kickbacks are being prioritized over relevancy when it comes to where Deutsche Telekom’s ads are bought, according to Deutsche Telekom. Transparent ad buying is top of mind at Deutsche Telekom, following a string of reports from the Association of National Advertisers, a flurry of damning indictments of the state of the media supply chain from high-profile marketers like Procter & Gamble’s Marc Pritchard and a series of mishaps from the big online media players.
In a statement, Deutsche Telekom said, “The [internal] group will strengthen its internal competence in order to ensure media-neutral strategy, collaboration and the steering of all activities in the operating model.”
A glimpse of how operating model might work came earlier in the year, when Deutsche Telekom ran a two-day workshop in Berlin, as reported by The Wall Street Journal. Media agencies, data companies and technology firms gathered and were asked to map out how they might use their combined skills to complete certain marketing objectives, all under the watchful eye of the Deutsche Telekom’s most senior marketers.
“We will carefully manage how these multiple stakeholders work together by, for example, making a part of their payment directly related to their collaboration score,” Hahn said.
The creation of hybrid models like the one at Deutsche Telekom isn’t something particularly new; the likes of Pernod Ricard and Coca-Cola have experimented with aspects of it for years.
“I don’t think it [the hybrid model] has worked its way through the market yet, but it’s certainly happening amongst some of our more informed members,” said Phil Smith, the director general of the British advertising trade body ISBA.
Deutsche Telekom is demanding transparency, but that doesn’t mean it wants to pay more for it, according to Hahn.
“Are we paying a premium because of our tough transparency clauses and demands? We don’t think so, as the competitive effect with three suppliers in each lot, all eager to win the business, cancels that premium out very quickly.”