As the digital display advertising ecosystem grows, it becomes more crowded. Clutter and complexity mean expense and inefficiency -- problems brands have lately solved by bringing programmatic operations in-house.
A 2018 Association of National Advertisers (ANA) survey (download required) of 412 client-side marketers found that many in-house agencies are now handling strategic services, including creative (76%), branding (52%) and marketing (51%) functions. And AdWeek’s trends for 2019 predicted that this in-house transition of services would continue. I believe that prediction is poised to bear fruit because brands increasingly want to control the customer experience, and that is what in-house programmatic operations allow.
There is nothing more important to a company’s success than its customers. When companies rely on external agencies, however, they often miss out on valuable data about their customers’ profiles and behaviors. Bringing efforts in-house empowers brands to enhance customer targeting, improve ad performance and enjoy the freedom to produce their own creative, optimizing as they collect more data. Another critical benefit is the alleviation of brand safety concerns, which evaporate with increased visibility into the buying process. Employed successfully, the self-service model is synonymous with efficiency, transparency and flexibility.
Why the reluctance toward comprehensive self-service models?
When it comes to bringing these services in-house, costs are often prohibitive. Success has its costs. Although nearly 80% of respondents to the ANA study reported using in-house agencies, only 44% had made the shift in the last five years, and 90% maintained some reliance on external agencies.
The move requires significant investments in technology, including a data management platform, a demand-side platform, inventory targeting capabilities, measurement tools and more. It also requires investments in talent, which for many companies is one of the biggest hurdles to overcome -- not just recruiting the right managers, developers, engineers and creatives, but keeping them over the long term. The way I see it, the price tag on talent is one of the most compelling reasons to stick with a hybrid, internal-external model.
Still, the advantages of bringing things in-house are substantial enough that I expect the trend to proliferate, whether brands choose the hybrid or completely self-service route. It all comes down to data: In-house means more and better data, which means brands can make more and better decisions. It means brand managers can ask for performance reports and gain a more robust understanding of the customer. It means your company can make more relevant ads and deliver a more comprehensive, meaningful customer experience at every touch point.
Choose the right approach to bring your programmatic operations in house.
For some companies, it may be that a hybrid approach is the best solution. Garter recommends that only brands with an annual programmatic budget of $50 million or more go fully in-house, and those with budgets below $10 million continue outsourcing. Those in between can consider bringing certain capabilities in-house and leaving others to agency partners. While keeping a tight hold on customer insights has obvious benefits, for instance, so does relying on the creative expertise of, well, creative experts.
Different brands have different needs, and different needs merit different solutions. What’s clear to me, however, is that the future will bring a renewed focus on the customer experience. Despite the costs of going in-house, there’s no overstating the value of owning every aspect of your customer’s journey. In an ever-fragmenting digital ecosystem, that value will only grow.
