When brands started bringing their programmatic solutions in house, it sounded an alarm for their agencies: Last year alone, several Fortune 500 companies — including Allstate, StubHub, Unilever and Netflix — started taking programmatic in-house in order to have more control over their first-party data and to avoid high agency fees.
But what started as a trickle has yet to turn into a flood — and most likely won’t anytime soon. Taking programmatic in-house sounds good in theory (and in “top ad tech predictions” posts), but it’s messy in reality. If brands want to execute programmatic media plan on their own, they need to gather tremendous amounts of data, hire experienced staff and put considerable amount of work into setting up a campaign. For many brands, this is a bridge too far.
“I don’t see more brands taking programmatic in-house, although there’s always a number of extremely digital savvy advertisers around who optimize programmatic by themselves,” said Ruud Wanck, global CEO of GroupM Connect. “It’s a very limited group.”
Complicating the question is that brands may define “in-house” in different ways, Wanck continued. It could mean working with a single demand-side platform (DSP) or it could mean establishing a dedicated in-house team to handle everything programmatic.
“If you look at the traditional side, many brands have media managers who work with GroupM to manage media planning. Does that mean brands are moving media in-house? No,” he added.
A few obstacles on the brand side
While big companies may have the ability to optimize programmatic buying by themselves, it’s difficult for most brands to utilize this technology without agencies’ help. For starters, an in-house approach requires tremendous scale and a significant amount of data to design the right strategies and execute the right plans.
“It may make sense for larger spenders like P&G, Ford and Netflix, but brands with smaller budgets won’t produce nearly enough data to justify the investment,” said Evan Krauss, vp of publisher development at PubMatic.
Beyond data, brands need to recruit the right people with proper skill sets to deal with different DSPs. When they have other marketing priorities, they may not be focused enough to build full-house capabilities and use technology platforms to manage data and audience performance. In comparison, agencies, especially big ones, can negotiate with various DSPs at scale.
“Geographically speaking, programmatic experts are located in New York City and the Bay Area, so senior strategic visionary type of skill sets may not be readily available in the areas where brands would be setting up their trading desks,” said Oleg Korenfeld, svp of ad tech and platforms at Mediavest.
On the agency side
Meanwhile, as brands’ demand for programmatic is growing, the question for agencies has shifted from ‘Should we do programmatic on behalf of clients?’ to ‘How can we stand out in programmatic?’
Big agency networks have the advantage here. They’ve developed their own programmatic technology and products through mergers and acquisitions. Publicis Groupe established Vivaki in 2008 and acquired Run in 2014 to look after its programmatic function, while WPP GroupM purchased Xaxis and DSP technology Proteus (via the acquisition of The Exchange Lab). Dentsu Aegis, on the other hand, has Amnet to manage programmatic. And Omnicom has trading desk Accuen, while IPG has Cadreon.
While these agencies still integrate third-party DSPs like DoubleClick Bid Manager and The Trade Desk as well as data management platforms like BlueKai to optimize campaign performance, their proprietary programmatic products distinguish them from the crowd and enable them to be less dependent on ad tech vendors.
Agencies outside of the ones that have programmatic platforms cannot license programmatic products from those big networks. So they have to either establish their own technology stack or rent technology from third-party ad tech vendors.
Either way, they’re presented with a dilemma: In the rent model, agencies need to offer the technology under its vendor’s brand. Some companies offer white-label options, but the agency will never stand out with this approach because others can do the same, according to Maciej Zawadziński, CEO of Clearcode.
If agencies can build a technology stack (at a smaller scale than big networks), on the other hand, they can have more control over data, customize the technology based on clients’ needs and avoid price markups that are typical in programmatic buying. The biggest disadvantage of this approach, of course, is the risk of investing money in building or acquiring a technology without any positive return on the investment.
“That’s why I think agencies are better off focusing on the parts of the ad tech ecosystem that can help them to better serve their clients or offer something unique on the market rather than building ‘commodity’ technologies that are just copies of other platforms,” said Zawadziński.
Agencies still play a pivotal role
Some agencies are doing better than others in programmatic. Brands complain about issues like transparency and viewability, but they can hardly handle programmatic without their agency partners.
Aside from the intricacies of programmatic mentioned above, it’s not ideal for brands to work with tech vendors directly, because they lack expertise, experience and direct relationship with premium publishers. Meanwhile, agencies may be able to negotiate a better deal (a lower commission with a DSP) due to the large volume of media buys that agencies manage on behalf of their clients.
Essentially, programmatic is just trading with a methodology. It’s not separate from a brand’s overall media buying plan. “Programmatic is not one thing. Instead, it’s a combination of strategy, operations, technology, trading and data. They all need to work together,” said Wanck from GroupM Connect.
“It’s like if you want to book a taxi, you are not going to start your own taxi company,” he said. “You use Uber.”
Brands extend inclusive marketing efforts beyond Black History Month
As more inclusive marketing becomes the norm, brands like IPSY, SiriusXM and Jack Daniels ramp up for Black History Month and beyond.
Snapchat’s pitch to advertisers is starting to feel as ephemeral as its content — and its Q4 results prove it
While it may be too soon to count out Snapchat's ads business entirely, rewiring it into something more appealing to advertisers won't be easy — especially when so many marketers aren't advertising much there in the first place.
Marketers seek agency-of-record relationships with influencer agencies as influencer marketing matures
Marketers are moving away from a project-based approach to a long-term vision with influencer marketing agencies participating in strategy meetings along with other agencies rather than being an afterthought.
SponsoredQ&A: How Jounce Media and Teads are framing SPO’s role in driving sustainability
As supply chain concerns abound, marketers are increasingly focusing on the main motivators that drive efficiency in their operations, including financial considerations, supply chain transparency and, most recently, environmental concerns. Sustainability has not always been at the forefront of the digital video buying process for the ad industry, but brands like Teads are taking steps […]
Why acquisitions could be the inevitable future for embattled in-game ad companies
As game developers and big tech companies alike realize the revenue-generating power of mobile gaming, they have engaged in a flurry of merger and acquisition activity.
Marketing Briefing: With younger consumers questioning brands’ trustworthiness, marketers turn to scenario planning
More certainty that a marketing play is an authentic fit for a given brand is key as consumers are more skeptical of advertising than ever.