Sir Martin Sorrell’s view that advertisers trying to do programmatic in-house will be a short-lived trend is incorrect, argues Infectious Media's chief executive, Martin Kelly.
A recent survey by the US Association of National Advertisers (ANA) revealed that about 31 per cent of the companies polled said they’d expanded their in-house capabilities to manage and oversee programmatic buying.
Sir Martin Sorrell said this move to doing programmatic in-house would be a short-lived trend because it was an advertiser reaction to "serious economic conditions."
Economic reasons aren’t the motivation
But it’s a mistake to say that this is about looking to save money in the short term or that marketers actually want to take programmatic buying in-house, as neither is completely true.
The trend is really a result of the growing realisation that technology is redefining the media buying industry as it has done many industries before. One of the outputs of this huge change is that the existing agency model is becoming increasingly outdated at a rapid pace.
"In-housing" has become an umbrella term for advertisers challenging the programmatic solutions offered by their existing media agency and exploring different operating models that suit them and their own structure.
For some international advertisers, programmatic has offered them a way to centralise their use of first party data assets and execute buying based on a central strategy rather than a fragmented local market approach. This is not a short term economic play. Programmatic is changing the rules and in this situation a media agency needs to redefine its operating model and how it engages with clients. With brands such as American Express taking programmatic in-house, this is something that is becoming very real.
For others it’s about re-examining how they should engage with their agency partners in the programmatic era. Since the start of digital advertising, the choice of which ad tech vendors an advertiser worked with was driven solely by the choices of their media agency. Most didn’t even know which adserver they were using to track and report on their campaign effectiveness. Over time this has changed, and ad tech has moved from simply a reporting tool to an executional platform which houses a huge amount of an advertiser's first party data. Therefore it’s becoming increasingly important to many advertisers that they are involved, or even making these decisions themselves. It can take months to on-board a technology vendor properly and some are choosing to do this themselves, not through a third party.
This has led to advertisers such as KLM and Mondelez sourcing their own technology vendor contracts and asking their agencies to execute programmatic campaigns on their behalf using this technology.
What the ANA survey really reveals
What the ANA survey has revealed is the desire from advertisers to educate themselves on the programmatic advertising landscape. As more and more buying goes programmatic (and not just in display), the role of an agency is being questioned by many advertisers. Are they management consultants, technology owners, media buyers, some or none of the above?
What remains true is that advertisers need help to navigate an increasingly complex advertising landscape where specialist skills and scale are valuable, and this is what advertisers have always bought into.
So while I fully agree with Sir Martin when he says that bringing programmatic totally in-house isn’t an attractive solution for many advertisers, that’s not the root of this issue.
Redefining what media agencies do for advertisers and their operating model is and this is something altogether more fundamental.
Martin Kelly is the CEO & Co-founder of Infectious Media
This article first appeared in MediaWeek
