Over the past few years, programmatic ad buying has emerged as one of the most important, impactful, and — at the same time — controversial forms of media buying in the advertising industry. While marketers are hard pressed to deny its effectiveness among consumers and its overall marketplace influence, they still have reservations about the complicated, fast-moving process. As such, some advertisers have moved their programmatic buying operations in-house rather than use a media buying agency.
In fact, late last year, the Association of National Advertisers (ANA) released a study showing that more than one-third of respondents (35%) expanded their in-house programmatic media buying capabilities and reduced the role of external agencies that previously performed that function. The 35% figure marked a notable increase from a 2016 ANA/Forrester report that found only 14% of ANA marketers were reducing the role of their external agency as a result of in-house expansion.
Jake Davidow, previously head of programmatic buying for JPMorgan Chase & Co. and now head of digital marketing for Chase Home Lending, played a key role in the decision to bring the company’s programmatic in-house. Davidow, who will address the topic at the upcoming ANA Advertising Financial Management Conference in Hollywood, Fla., April 29 - May 1, offers a preview of his presentation.
Q. JPMorgan Chase recently brought its programmatic buying team in-house. Why did you do it and how has it worked out?
A. We brought our search marketing efforts in-house in 2013 because we felt there was a case to be made for the efficiency of running things internally, and the results we realized over the next three years blew past all expectations. We had control over our data and full accountability, which created a level of transparency that allowed for really honest conversations about what was working and what wasn’t. In three years our account production through search has surged and we’ve been able to do some exciting things across the company that would never have been possible before.
So, as programmatic began to become a more important part of our buying mix, we made the decision to replicate what we had done with search, knowing it would probably work just as well. Transparency within the industry is murky at best with a supply chain that is rooted in obscurity, so bringing programmatic in-house became a risk mitigation exercise as well as cost/efficiency play.
Q. What was the primary challenge you faced in bringing the programmatic buying function in-house?
A. Ad fraud, viewability, and brand/reputation risk are daily challenges. It’s so easy for bad actors to cheat their way around in this space, so it’s a constant battle to stay in front of them. Creating our whitelist went a long way to protecting us from the brand risk of our ads showing up on fake news and/or hate sites. We’ve also taken significant steps in building our own algorithm that allows us to advertise on YouTube in a way that is safe for us, too.
Q.What do you think about viewability, and are current viewability measurement standards as prescribed by the Media Rating Council satisfactory?
A. I think the focus on viewability obfuscates the reason why we use programmatic ads in the first place. The promise of being able to target an individual with a message, ensuring you serve the right product to the right person at the right time, is the holy grail of marketing. By focusing on viewability metrics we enter into the wrong conversation, because even if someone sees your ad it does not mean that they noticed it or that it resonated with them.
One hundred percent viewability should be table stakes. However, unfortunately for the industry, a lot of advertisers treat it as a KPI, or rather as an outcome instead of a requirement. The right conversation we all want to be having is what was the impact the ad had on the person who saw it? What did it cause people to do? Did we sell more, less, or the same when we spent our budgets on programmatic ads?
Q. Do you think more companies will continue to bring programmatic ad buying in-house, and should they?
A. I don’t think there is a one-size-fits-all approach to this. There are some really strong agencies out there with incredibly talented teams who are delivering on the promise of programmatic media. Additionally, something you won’t hear people talk about is just how good agencies are at taking care of business on the back end.
I can tell you firsthand that there is a huge effort involved in small day-to-day things like paying publishers/platforms/tech companies, enforcing viewability standards, staying on top of emerging trends, etc. Agencies handle the operational aspects seamlessly and that piece alone is reason enough for a lot of companies to continue to use agencies for their programmatic buying. Ultimately, companies are going to do what’s right for them and I think the agency model will continue to hold value for most.