Update: An earlier headline to this story stated that Bayer is bringing all media in-house. It was edited to reflect that the media Bayer is bringing in-house is all digital media.
German pharmaceutical company Bayer, maker of consumer health products such as Aleve and Advantix, is on a two-year mission to bring all media in-house. Bayer began building out its in-house programmatic operations in March 2017, and currently has a 10-person internal team that works in tandem with GroupM agency MediaCom on media buying. But starting in 2019, Bayer will drop this hybrid model and grow its internal marketing team to 20 or more people to handle everything from the strategy and planning of media buys to their execution.
“We realized that if we really wanted to be leading edge marketers, then we would need more expertise in the building, not only from a strategic level but a tactical level,” said Josh Palau, vp of digital strategy and platforms at Bayer.
Palau, who first spoke about this during presentation at the Programmatic I/O conference in New York in October, said the company is moving its media in-house to accomplish a variety of goals, including to increase the company’s own internal expertise around marketing, to drive better performance of its buys and decrease the cost of its buys and cut off agency fees. Palau would not say how much the company expects to save from the move, but that there will be cost-savings and more that the company can then put into marketing.
“If you’re a search person, you may be great at search, but you’ll be a thousand times better if you understand the category you support and the consumer journey,” said Palau. “You only get that when you are part of the brand team. You also don’t get that in a hybrid model because while my search person is great, she can’t be as deep on 15 or more brands.”
While bringing all media in-house is still a rarity among companies, the overall push to move services in-house is strong, despite issues with talent. The ANA estimates that 78 percent of brands are creating some kind of internal structure, versus 58 percent in 2013.
“It is arguably more economical, and the team may be more easily brought up to speed as they are part of the company’s DNA,” said Chris Allieri, founder of communications agency Mulberry & Astor. “Companies of all sizes are seeing that the old-school agency-of-record model doesn’t work for them. It’s costly, it’s inefficient and, oftentimes, one large agency doesn’t present the best team or best work for the job all of the time.”
Bayer has a two-year plan, which includes the use of 6-year-old programmatic firm MightyHive. For the first year, beginning in January 2019, Palau said Bayer would begin hiring talent to handle things like strategy, planning and analytics, and use MightyHive to execute those buys. But then, by the second year, Bayer would bring everything in-house and execute everything from search to social buys.
“Year one is going to be the strategy and planning, and year two is going to be the actual physical act of buying and clicking buttons,” said Palau. “We’ll own all the digital end-to-end.”
Palau said Bayer was attracted to using a transition agency like MightyHive because it allows the company to avoid a lot of the growing pains when it comes to bringing media in-house. Unlike other agencies, MightyHive promises that a company will be self-sufficient after a dedicated time period.
One issue is talent. Palau said getting people to work in North Jersey can be a challenge. Using MightyHive provides the people the company will need to begin the transition. “As we start to onboard all of our data and put things into our system, there will be the question of the bandwidth of the team,” said Palau, “which is why it’s so important to have a group like MightyHive support the business.” According to Digiday research, 73 percent of marketers said hiring talent is the most significant obstacle to bringing media in-house.
Palau said Bayer is concentrating on drawing in professionals who have perhaps two jobs under their belt already but are looking for the flexibility that working on the client-side can provide. “Agency and startup life can be taxing,” he said. “We’re looking for people who have lived that life but now want to work in a different environment and help change the way a more than 100-year-old organization works.”
Another reason is that MightyHive will give Bayer the keys to everything it builds. “When you work with your agency, they own the Google seats, and they don’t have to give them to you. Technically, the set-up and data associated with it is typically owned by your agency,” said Palau. “That makes transitioning a challenge.”
The move in-house will take duties away from GroupM agency MediaCom, which has held the business since 2011, although GroupM will still manage the company’s communications planning and offline media. Bayer still uses multiple outside creative agencies for its campaigns, among which include Omnicom’s Proximity and BBDO for its animal business, and Razorfish and iCrossing for its consumer care division. Bayer spent around $500 million annually on advertising in 2016, according to Kantar Media.