P&G’s not so recent announcement of buying majority of their Media programmatically, got me ponder a question to media agency industry: With the continue growth of programmatic investment, is brand moving (or at least thinking of) their media buying in-house through setting up of internal trading desk? I don’t have the any statistic with me though anecdotal evidences did suggest that this may be the case. Coincidentally, I recently did know of one financial company investing heavily to beef up their internal capabilities on Paid Search and Programmatic.
With the maturity of the ad-tech and brands getting more savvy in programmatic buying, I’m sure the reasons of moving in-house are enticing and warrant a long term thinking. Just to name a few potential advantages:
- Transparency. As in my previous post, Transparency and charges continue to be major issues that brands face when using agency trading desk.
- Cost saving. “Why are we double paying our agency? One to Media agency and one to agency trading desk?” This is a recurring question brands have been asking when engaging agency trading desk. By bringing in-house, brands will hope to cut the “middleman” and go direct.
- Operation efficiency. With the emphasis of real-time marketing and the rise of paid social, content marketing, brands expect media buying to fit right into business process and integrate well with these different disciplines. The current set-up of a media agency process of campaign planning -> Insertion Ordering -> campaign launch, is no longer the optimal process. By bringing the programmatic part of it in-house, brands will ensure less one layer to deal with and hopefully translate into faster response to market dynamic.
- A test before the ultimate “In-house”. By bringing programmatic media buying in-house first, it’s open the path to bring in the full media buying in-house. Retainer for media agency is notorious high and if programmatic buying takes up 80-100% of media budget, it make total sense to move everything in-house.
However, before rushing to fire your agency trading desk, here are some pitfalls to consider:
Resources – Ok. This is the obvious one. We all know that Digital media person are hard to recruit, especially in this part of the world, Asia Pacific. Definitely, brands have certain advantages compared to agencies, as many digital media person will consider moving to a client role as part of their long term career plan. However, what’s next after their move in-house is certain one of the consideration. Your newly recruit digital person may willing to get their hands dirty setting up campaigns in Demand Side Platform (DSP), creating ad server tags etc for 1-2 years, but continue to keep them happy is definitely a challenge itself.
Complexity – “Advertising is getting more complex not less complex,” as Vivaki Singapore director Stephen Tompkins mentioned in recent ATS 2014 event. Yes, there is a trend for past few years in bringing paid search in-house. So the notion is “If we can do it for search, why we can’t do the same for media?” The answer is.. basically, you can’t. Reason being that although paid search and programmatic buying may have similar characteristic such as real-time bidding, the nature of their operation are totally different. Paid Search, literally, you just work with 1-3 players, Google and probably one other local search engines, But for programmatic, you are dealing with much more complex players from 3rd Party data brokers, ad exchanges to local publishers who never heard of programmatic buy, and at the same time, dealing the mess of private deals, guarantee premiums etc.
So does it means brands will never have the chance to take programmatic media buying in-house? Of course you can. Just prepare to invest and have the strategic intend to bring it through. The last thing you want is after setting up the in-house team for 2 years, cost restructuring happens and the entire team need to be retrenched.
So continue to ask yourself this question “Why do you want to take your media buying in-house?” Transparency? Cost saving? Operation efficiency? All these are valid reasons but please remind that all of these can be resolved without taking the media buying in-house.