Recent research by the World Federation of Advertisers (WFA) reveals that, for 45 per cent of marketers, a major priority for 2018 will be to internalise their programmatic capabilities. And it’s not difficult to understand why brands are keen to bring elements of their marketing mix in-house. A number of high-profile news stories over the past year have brought home just how important it is to guarantee your brand’s safety online, if this wasn’t already a priority. Unilever recently proved there can even be a commercial benefit to going in-house, with the brand announcing it had saved $2 billion over the past year by, among other things, cutting its agency partnerships.
However, Infectious Media conducted its own research into this trend and found some discrepancy over what brands really want. After surveying 200 decision-making marketers with programmatic remits in EMEA, APAC and NOAM, 96 per cent of those interviewed revealed they do in fact see agencies managing multiple aspects of programmatic advertising in the future. On the other hand, 84 per cent admitted that they seek greater control over these same programmatic operations. So, what’s the solution?
Rather than a trend leading to brands in-housing all of their programmatic capabilities, a much healthier, hybrid relationship is emerging, where some elements of a brand’s programmatic activities are handled in-house and others remain with the agency. This relationship involves agencies taking a more flexible approach with clients, adapting their services, technology and trading models to make them more modular. If agencies can achieve the right level of flexibility, brands will be able to pick and choose from their services according to their needs, instead of relying on a broad-stroke service.
Agencies also offer distinct advantages that brands would struggle to replicate. In-housing programmatic isn’t an easy process and just keeping up with the basics is a constant battle. Agencies by necessity constantly have to update their approach to win and retain business. For brands there simply isn’t the same impetus to stay at the cusp of programmatic, making it all the more challenging.
And when it comes to attracting the necessary talent, agencies are also one step ahead. Finding skilled marketers, engineers and data-analytics specialists to run in-house activities can be extremely challenging. This is because the programmatic talent market is highly competitive and concentrated in a few major cities, like London and New York. Agencies already have well established programmatic capabilities based in these locations, making it easier to attract talent. For brands this isn’t always the case.
But, naturally, agencies have a job to do if they want to convince brands that a hybrid relationship will prove advantageous to both. In a digital age fraught with pitfalls over brand safety and ad fraud, brands are feeling understandably concerned. It is therefore imperative that agencies deliver a service that is not only value-driven, but also completely transparent. The best way to manage this would be by investing heavily in their programmatic technology and data analytics capabilities, rather than relying on third party ad-tech vendors. This will remove another link in the convoluted advertising supply chain and prove to brands that they are serious about their safety.
Brands, likewise, should be demanding a better deal from their agencies, and one that really suits their unique abilities. They should also feel comfortable questioning the level of access granted to them, switching agency partners if necessary, and modifying contracts and inserting audit clauses where appropriate to ensure their full security.
Though going in-house may seem like the safest solution, it is an expensive, time-consuming and complicated process, so brands need to think carefully about what they can realistically take on. Equally, agencies must accept that brands want more control over their digital advertising and adapt accordingly. A hybrid model can satisfy the demands of both parties, and still drive programmatic value; ultimately offering brands and agencies the best of both worlds.
Martin Kelly is co-founder and CEO of international programmatic agency Infectious Media