Programmatic is now mainstream – expected to account for 88% of digital display ad spend in the US by 2021 – so brands naturally want to understand it better and gain more control over how their advertising budgets are spent.
To achieve this greater level of understanding and control, many brands are moving pieces of programmatic planning and buying in-house. In a survey of 412 U.S. client-side marketers conducted by the Association of National Advertisers (ANA), 78% of respondents claimed to use in-house resources for programmatic, up from 58% in 2013.
As well as providing the opportunity to learn about the programmatic space, in-housing enables brands to standardise part of the stack, retain control over their valuable first-party data, and own direct contracts with technology vendors such as demand-side platforms, ultimately increasing transparency.
But, first, we need to be clear: the question has never been about whether an advertiser should in-house or outsource programmatic buying, it has always been about which of the many pieces of this immensely complex and evolving process should sit where. And the answer to that remains: "It depends."
All or nothing?
Like many digital advertising concepts, the definition of in-housing is nuanced and depends on how far brands want to take independent efforts and where they want to rely on specialist partners. The majority of the brands that report in-house capabilities are taking small steps with partial capabilities involving media agencies.
As programmatic has gained a much greater share of media investment, brands are most likely to bring strategic pieces like data strategy and goal setting into their business. Other pieces like third-party audience data, brand safety, ad verification, and algorithmic modelling remain almost exclusively provided by specialists. But even on strategy, agencies – whether small independents or major media agencies – still rightly find themselves as valued consultants. Depending on a whole host of factors, advertisers are re-evaluating the right mix for them. They can choose to maintain some functions internally, outsource others, and also take a middle-ground approach where experienced agency employees are seconded into their organization to facilitate programmatic execution and optimisation.
Agencies have irreplaceable assets
While the prospect of in-housing can be attractive, nobody can deny that agencies are able to deliver valuable assets crucial for media effectiveness – whether programmatic or otherwise – including differentiated technology platforms, extensive networks of publisher partners, and attractive employer brands that draw media talent and expertise, who then work across sectors, clients, and markets. So, while brands may employ strategists and performance analysts in-house, they are still highly likely to use agency partners to access a wealth of experienced developers, engineers, ops managers, traders, and data scientists. It is also a rare advertiser that is willing or able to build and maintain purpose-built AI and machine learning technology – and the people required to build and use such tools, which are now crucial for competitive advantage in programmatic, both for developing strategy and driving value.
Agencies are evolving, always
Only client-driven agencies or providers of any sort will thrive, and that means adapting services and solutions to meet clients’ ever-evolving needs and sometimes the agency role will be to support a brand on the path to bringing programmatic buying more deeply into their business – particularly if this will ultimately provide the most value for the client. That means that complementary and consultative services that offer expertise and advice around problematic topics such as the execution of data audits, the implementation of attribution and measurement, and the use of machine learning algorithms in the decision-making process are becoming increasingly important.
In a world where brands are spending vast sums of money on programmatic advertising, there are very valid reasons for bringing key pieces in-house. But there is no better qualified partner to help them understand if and how such a process could work – nor support them before, during, and after – than their agency. So, whether in-house, outsource, or anything in between, agencies can, do and will continue to help.
Nicolas Bidon is the global CEO of Xaxis.