Vodafone backtracks on plan to take programmatic ad buying in-house

Vodafone is having second thoughts about its own marketers buying programmatic ads.

The shift comes three months after the advertiser said it would buy most of its online ads itself. Since then, Vodafone has started to buy its own search and social media ads but has yet to do so for display. For this to happen the way the advertiser intended, it would need to build its own trading desk, which is far more complicated to do than setting up dashboards to buy ads from search engines and social networks.

When asked if it still had plans to buy its own programmatic campaigns, a Vodafone spokesperson sent the statement: “Vodafone Group announced it would bring search, social and display in-house some months ago. The Vodafone operating companies are currently working through how and when to do this. In the U.K. — one of the largest and most complex markets — it has been decided to approach this in phases. To date, we have brought search and social in-house. We are monitoring this closely and may review our approach and delivery of programmatic in due course.”

It’s unlikely, however, that Vodafone marketers will be bidding for programmatic ads anytime soon, said a media executive who discussed the plan with the advertiser. Internal tensions over whether the marketing or digital team would own and therefore fund the programmatic setup stalled its progress, said the executive, who pointed to the spiraling costs of ad tech, talent and publisher relationships as the key sticking point.

It’s a lot of time and money for an advertiser like Vodafone to commit to when it could pay a flat fee and leave those issues all to an agency instead. Indeed, Wavemaker will continue to buy the advertiser’s programmatic ads.

“Vodafone won’t buy as much digital media in-house as they thought they’d be able to,” said another executive working on the project. “It’s not happening to a degree, but the business will still try and find solutions for each market where they want to make it happen.”

That solution is more likely to resemble the hybrid model advertisers like Duracell and Adidas have adopted, whereby Vodafone would own the contract to the ad tech and, subsequently, the data going into it, and also steer the media strategy. In those instances, the agency would usually still buy programmatic ads; it’s just under the watchful eye of its client. Some of those advertisers that have tried to buy programmatic ads themselves have had to U-turn back to their agencies for help.

“There are so many intricacies to consider before you take programmatic in-house. It is far more than getting a demand-side platform contract in place,” said Scott Moorhead, the founder of media consultancy Aperto One and a former media buyer at Publicis and Havas. “The biggest hidden cost will always be a miscalculation as to how much time and effort will be required.”

For now, Vodafone will focus on ensuring marketers in all 25 of its main markets are able to buy ads on search engines and social networks themselves.

Search and social account for a sizeable part of the £200 million ($263 million) budget the advertiser reportedly spends on digital ads, which in turn is a third of the £600 million ($790 million) it reportedly spends on all its advertising. Buying more ads internally should give Vodafone more insight into how effective its ads really are, the advertiser’s CEO Vittorio Colao told investors in May. Understanding how ads are traded online will also fuel Colao’s plan to test whether  Vodafone can feasibly build an advertising business that sells customer data to advertisers in a way that’s compliant with the General Data Protection Regulation.

Both Wavemaker and Brainlabs, the performance agency Vodafone hired to show it how to buy its online ads, declined to comment.


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