Brands like L’Oreal, Sprint and Netflix that have taken 100% of their programmatic in-house are merely one end of a continuum. In reality, few brands have taken that route.
A 2017 Association of National Advertisers report found that only 14% of brands were reducing the role of their external agency because of in-house expansion.. The challenges can be worthwhile, but only if a brand understands its ultimate goal in making the shift.
Here are the top reasons why organizations are considering alternative approaches:
As the roll call of brand names suggests, establishing your own programmatic capability
in-house can be expensive. One analyst said that companies should be spending at least $20 million a year before they consider going in-house — otherwise, they won’t be spending enough to
generate savings to make the transition worthwhile. However, other non-multibillion-dollar companies have successfully in-housed by concentrating spend to justify the cost of more full-time
Talent is the biggest expense related to in-housing programmatic. Programmatic is a new discipline — it’s only been
around for a decade — and it’s not taught in most schools. There is a finite number of people with this type of expertise, which can make setting up your own program challenging.
The problem of finding programmatic talent is so acute that some organizations have poached employees from outside their office region, even out of their country in some cases. For brands with offices in tech hubs, this search might be slightly less cumbersome. The good news: You can rely on the professional services talent of your technology partner to fill the gaps until you can get the right internal people onboard.
An individual choice
The root of the in-house versus outsource argument is which results in better marketing outreach over the long term. In a recent report, we outlined four models for managing the evolution of programmatic media:
The Contract King: A brand owns its technology stack and data, but the agency continues to have full control over planning and execution.
Happy Commune: Some or all parties sit at the table and have regular points of contact.
Special Ops: The agency plans to bring strategy and execution in-house, but continues to rely on its agency for outsourced operations.
The Lone Ranger: A brand takes full control of its addressable media tech stack and the agency no longer plays a role.
Deciding which model is best is an individual decision and based on the talent available, the long-term goals of the brand and financial needs, among other factors. Automation is a wild card in this mix.
Marketers who are asking if they should take programmatic in-house may be asking the wrong question. A better question is, “Which needs are currently being unmet, and what is the best way to resolve them based on our organization’s appetite for change?”