Brands thinking of bringing their programmatic trading in-house need to consider whether they have to digital maturity, talent, data and risk appetite to make the transition. That’s the view of Nicola Lewis Chief Investment Officer, GroupM.
Speaking on a panel at Advertising Week in Sydney, Lewis said her agency would “absolutely support clients” that want to take programmatic in-house, but first they need to have a frank discussion.
“It’s beholden on us as an agency to really pose some key questions to clients when they are thinking about doing so,” Lewis said.
The first is, where are you sitting in terms of your digital maturity? Followed by, do you have enough people internally to manage the complexities of programmatic?
“It’s a very, very complex ecosystem you need to understand the technology, you need to understand the data,” Lewis said.
Advertisers also need to have access to robust data and the ability to organise it, Lewis said.
They also need to consider what their risk appetite is in terms of brand safety and viewability, Lewis said, noting GroupM builds a risk matrix – high risk, moderate risk and low risk, for its clients.
“At GroupM we pride ourselves on pushing the boundaries on viewability and brand safety but they are just considerations when you are thinking about taking something in-house. I think clients or brands that are doing that programmatic in-house model are considering all those points.”
Approaches to going in-house
Also speaking on the panel was Rajeev Goel CEO of adtech business PubMatic. He noted in-housing of programmatic is often talked about as a binary thing, but bringing elements of media buying in-house doesn’t necessarily mean cutting off agencies completely.
“In reality I think it is much more of a spectrum where clients are taking supply chain integrity, evaluation of contracts, technology partners in-house because of the fraud, bots and other issues over the last couple of years. But they are still working very much with their agencies to do the execution, to do the trading, to do all the tactical work buying,” Goel said.
During a separate session on the Future of Agencies, another adtech exec, The Trade Desk GM Mitch Waters, unpacked three approaches to in-housing programmatic, noting the term means different things to different businesses.
First is the beginners who have never dabbled in the world of programmatic and want to understand what they’re paying for.
“They just want someone to come and talk to them, they don’t necessarily want to take it in-house but they want to have an understanding of what their agency has been doing for the last 10 years,” Waters said.
The second group Waters described as the advertisers that form a “centre of excellence.”
“Procter and Gamble is a perfect example, they have 13 people in Cinnacati that develop and evolve programmatic strategies but then they push it back out to the hundreds of agencies they have across the world that have the relationship with publishers,” Waters said.
The final group is the smallest, the “Netflixes of the world.”
“They have the datasets behind it and it’s the first time they are getting into the space. They’ve never had an agency relationship so they’ve not gone on the journey,” Waters said.
‘Not everyone can be Netflix’
Shivani Maharaj National Head of Content & Partnerships at media agency Wavemaker, noted approaches to programmatic vary depending on companies’ core competencies.
“Netflix is a business rooted in data and technology. If you’re a soap company buying TV, that’s not your core competency. It’s very much about having the right advice,” she said.
“At the end of the day training and keeping everyone upskilled to have experts and specialists [on hand], that’s what clients struggle with.”
Speaking with Which-50 recently, Matt Prohaska CEO and Principal of Prohaska Consulting, also noted “not every company can be Netflix.”
He said bringing programmatic in-house is a growing trend, but expects the “pendulum will end up swinging back in mature markets by the end of next year” as brands realise the resources and expertise required.
The ongoing costs can be difficult to justify. In the case of Lenovo, bringing programmatic in-house improved efficiency, viewability and reduced CPMs, but the decision was made to go back out to its agency partners.