Commentary

Why In-Housing Programmatic Isn't All-Or-Nothing Choice

The question of whether or not to take programmatic in-house is often presented as a binary choice. It’s not.

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:

Costs

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 programmatic talent.
 
Talent

advertisement

advertisement

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?”

 

2 comments about "Why In-Housing Programmatic Isn't All-Or-Nothing Choice".
Check to receive email when comments are posted.
  1. Ed Papazian from Media Dynamics Inc, September 18, 2018 at 1:20 p.m.

    A good piece, Parker. I would add that the nature of the activity must also be scrutinized. If sales promotion is the primary purpose for using programmatic buying for digital media---search, lead generation, etc. ---that's one thing and moving in-house may, indeed, produce a savings. However, if it's mainly a branding operation---which is very rare----the problem in getting people with the right expertise is magnified and, as digital sspending for branding campaigns usually represents only 10-15% of the ad budget, going in-house may not be the way to go.

  2. Alex Hultgren from Quantum Storey, September 19, 2018 at 10:16 a.m.

    Great piece Parker. I think there are two other challenges big companies face when bringing programmatic in-house: 1) to develop leaders, marketing leadership often likes to move people around to give them cross-functional experience, and bringing in highly specialized experts - particularly in an evolving area like programmatic/RTB - screws up this model; and 2) big companies can become very attached to systems and tech stacks where there has been significant capital investment (and were most likely painfully integrated with legacy IT systems), so the in-house programmatic tools may become antiquated relatively quickly. An agency can spread any upgrade costs or platform changes over multiple clients, which is more efficient for everyone.

Next story loading loading..