Commentary

In Programmatic, How Many 'Hands On Keyboards' Do Brands Really Need?

In a survey released by the Association of National Advertisers last year, 31% of marketers said they had expanded in-house capabilities to manage and oversee programmatic ad buying.

Meanwhile, major advertisers like Target have built their own in-house data management platforms, citing the importance and value of their own retail sales data. 

Brands now have the sophistication to manage their own programmatic practices and are staffing up with experts who have the knowledge needed to completely own the programmatic process. This gives brands more control than they’ve ever had, and the potential to upend the programmatic paradigm, much to the benefit of the industry as a whole. 

Brands also now have the authority to dictate which platforms they (or their agencies) work with. Netflix handles programmatic in-house, while Target has forged direct relationships with demand-side partners to access inventory. Meanwhile, brands like AT&T, Verizon, and Johnson & Johnson, alarmed by the YouTube brand-safety crisis earlier this year, are likely engaging directly with tech vendors.

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This is hardly a sign of the apocalypse, as agencies aren’t going anywhere. What will happen is that agencies need to consider what kinds of budgets they’ll prioritize, and how they can add strategic value for these increasingly competent brand clients.

While clients are getting more sophisticated, agencies will need to stay one step ahead, offering analytical insights and helping clients continue their programmatic education. This requires agencies to pick up the pace of their own education, and embrace programmatic to an even greater degree than their clients. The only way to win an account from a brand with in-house programmatic experts is for programmatic to be a core capability of the agency itself.

The other path is for agencies to abandon programmatic budgets altogether. This is dangerous in an ad industry that is increasingly going digital, but agencies could theoretically only target upper-funnel budgets, eschewing programmatic work to focus on non-digital branding and awareness efforts.

The more likely model is for more brands to adopt hybrid models and agencies to continue to decide how they want to fit into a programmatic landscape where clients call the shots. After all, many agencies and clients lack the resources to staff and set up an in-house programmatic team that can compete with folks that have been in business since the inception. 

A hybrid model may be something where the brand controls the contract with the technology and dictate the terms and pricing, but the agency still drives strategy and uses the tools to achieve the brand’s goals.

Hybrid models can look many different ways, but they solve two problems right off the bat. First, a hybrid model provides needed transparency on media costs, URL placements, account set-up and architecture and varying levels of control, dashboards and logins.

Second, this new approach allows for experienced programmatic experts on the partner and agency side to continue doing the hard stuff, such as bid and campaign optimizations, segment analysis, data science modeling, and in-store attribution: the “hands on keyboards.” Allowing all parties to focus on the piece of the programmatic puzzle where their expertise lies provides tighter focus and stronger results.

Partner vendors will be tasked with creating product offerings that sit in the middle between fully managed services and “hands on keyboard self-service” to solve for client’s immediate programmatic needs. This all comes with pricing transparency, and lower percentages of spend-based billing models.

Agencies and partners will need to be creative when it comes to exposing their pricing for services that have historically been backed into a dynamic margin. Media buyers and clients will be seeing fees on things like data modeling, technology fees, creative, brand safety, insights and analytics. It will also force the market to pick a few things to drive home differentiation and exceptional value.

Marketers understand that the future is in programmatic, and their success relies on their ability to build a staff that understands this space. While agencies won’t necessarily suffer, they’ll need to continue to redefine what kinds of services they offer, and how they provide strategic value in the age of programmatic.

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