Should Programmatic Media Buying be Taken In-House?

In 2016, demand for programmatic media buying is expected to skyrocket at a rate of 39.7 percent, contributing to 67 percent of digital ad spending. According to an AdRoll survey, 66 percent of the marketers are planning to increase the programmatic spend as it fetches higher ROI compared to traditional methods. In 2015, 32 percent of the marketers had allocated more than 50 percent of their digital ad budget towards programmatic. Mobile programmatic has been one of the driving factors with U.S. advertisers devoting 60 percent of the programmatic spend. These trends denote a promising future for programmatic media buying.

While marketers are confident about the benefits of programmatic, there also is an increasing discontent about its nontransparent and complex supply chain. According to an ANA survey, 70 percent of the marketers have cited frauds in programmatic buys as a major concern. About 64 percent of them say there is a lack of transparency in the agency costs linked to the programmatic supply chain.

Recently, a major resonating trend is to take programmatic in-house. Nearly 30 percent of marketers have expanded their in-house capabilities to handle programmatic buys. It includes major marketers such as Unilever, P&G, Kellogg, Allstate and Netflix. This trend is further adding to the discontent, because it questions the sourcing approach.

Will in-house programmatic reap benefits for all? If not, what could be the best way?

Experts suggest in-house programmatic would be beneficial only for large spenders with billion-dollar budgets. Brands with lesser budgets cannot generate enough data to justify the investments. Other than data, companies need to invest in highly skilled talent that can handle multiple demand side platforms (DSPs). Such a talent pool is concentrated in New York and California where labor rates are very high. Substantial investment needs to be made on technology platforms to manage data and evaluate audience performance. On the other hand, network agencies can negotiate better with large DSPs at better scales. Following are some best practices that could improve the benefits achieved by outsourcing the spend.

  • The Internet Advertising Bureau (IAB) estimates ad fraud could cost as much as $6.5 billion in 2016. Marketers need to understand the limitations of programmatic partners and ad networks as fraudsters are becoming smarter every day. Marketers could on-board third-party technologies such as Google’s Spider.io, Integral Ad Science, ComScore or Forensiq to ensure ad placements are safer. This requires substantial investment.
  • Review the unique audience identification capability across multi-screens and the methodologies that address the privacy policies.
  • Marketers need to work along with agencies to make reporting changes that improve cost transparencies. There are agencies in the market that provide transparent costs to the marketers.
  • Marketers could on-board multiple DSPs for targeting a specific audience. This would help them close deals at optimal rates.
  • Work along with the agencies to ensure that best-in-class practices are established for pre-built analytical models, multiple format creative scheduling, methodology for multi-screen targeting and more.

Media buying definitely is turning into a technology-driven industry, and there is a paradigm shift in consumer experience. We see agencies heavily investing in digital capabilities for end-to-end needs, which puts marketers in a position to solve challenging issues in the future. It is critical to stay agile and get the best out of the agency landscape. Moving programmatic in-house might affect the agility and scalability of companies with smaller budgets.

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