With recent IAB research revealing that a majority of brands have created their own internal programmatic teams, Martin Kelly, co-founder and CEO of Infectious Media, explains why the future of programmatic will depend on hybrid relationships.
Research just released by the IAB (Internet Advertising Bureau) once again raises the issue of brands in-housing their programmatic advertising. The headline finding – that 65 per cent of brands have already created their own internal programmatic team – might not read well for agencies, many of whom have struggled to adapt to meet client demand amid the rapid evolution of technology and shifting advertising models. But is this really the death knell for agencies in programmatic?
Look closer at the findings and the picture isn’t so clear cut. Yes, 18 per cent of brands surveyed have brought all their programmatic buying in-house. However, around half (47 per cent) have only done so with part of the process. Meanwhile, 22 per cent have no plans to change their current relationship - and 13 per cent have trialled the switch and since reverted to the outsourced model.
Our own study of 200 decision-making marketers supports the IAB findings. It revealed that 84 per cent want more control over their programmatic advertising and a further 71 per cent think agencies have struggled to adapt to programmatic. Yet, crucially, nearly all of those questioned (96 per cent) believe agencies will continue to manage multiple aspects of the programmatic process, suggesting a more hybrid model could be the way forward.
That’s not to say the findings aren’t a serious wake-up call to agencies, which are struggling to win the trust and confidence of their clients. In our study, 74 per cent of respondents complained that agencies don’t fully report financial data or measure campaigns effectively (73 per cent), while 66 per cent feel they’ve lost control of their publisher relationships. Even more worrying, 53 per cent go so far as to say that agencies are untrustworthy, echoing Marc Pritchard’s well-publicised sentiments that the media supply chain is “murky at best, fraudulent at worst”.
Yet, while the reasons for bringing programmatic in-house can sound compelling, there are also plenty of risks in making this leap. According to the IAB, it could take up to a year to make the complex and time-consuming transition (our experience across multiple clients is actually two years), which involves co-ordinating multiple partner contracts and hiring specialist talent, as well as training up existing staff.
Beyond the challenges of setting up an in-house programmatic team, brands also have to think about sustaining this valuable resource in a market that is constantly evolving, with new technology, tools and techniques introduced all the time. Agencies have thrived as they are built around staying at the forefront of industry trends and having the scale of business and enough bodies to make this viable. Can this culture and business really be replicated in a business where programmatic advertising isn’t the core offering?
Rather than throwing the baby out with the bathwater, a new model is emerging, the hybrid model. A hybrid arrangement enables brands to bring some elements in-house, while plugging the gaps with external agency support and expertise. For example, a brand may have a strong analytical data team, with data management experience, but lack the talent or knowledge for programmatic optimisation. Or a brand might have built an optimisation team internally but not the strategic resource or publisher relationship team to support the team of optimisers.
A good example of how the hybrid approach can work is Deutsche Telekom, which has recently introduced a new media operating model across Europe. Aware that it required additional support to stay up-to-date with industry innovations, the brand is working with a mix of specialist agency partners, with Infectious Media engaged as digital transformation consultants to ensure the internal function stays at the forefront of data-driven advertising.
Brands looking to overhaul their programmatic model are right to do so in a market where the role of an agency should be questioned. Revisiting contracts, inserting audit clauses, and demanding full data access are great places to start. On the flipside, agencies must take client concerns seriously and begin to adapt their approach and recognize where they add value versus what an advertiser can do themselves. But this does mean a change in model and mindset, offering full transparency and much more flexibility, ensuring programmatic delivers the value it has always promised for brands.