The irony of in-house Programmatic

Starting to bring programmatic in-house can quickly remove the business case for doing so – and that’s a good thing

September 27, 2016

“It’s a free ride when you’ve already paid,” was one of Alanis Morissette’s famous attempts to define the word “ironic.” It might not be the Oxford English Dictionary’s definition of the word – but it certainly struck a chord with me. It was a phrase that popped into my head a few times during the panel session that I was a part of at the Get with the Programmatic conference last week.

There are lots of things in life that you suddenly find you no longer need, once you’ve done the hard work of being able to get them. For many clients, bringing programmatic in-house (the subject of that panel session) will feel like one of those things. After the effort involved in tracking down and hiring the right talent, cultivating the right internal culture, selecting the right platforms and building relationships with the right partners, marketers will realise this simple truth: once you are able to run programmatic in-house you have far, far less need to run programmatic in-house. That’s ironic – but it doesn’t mean all of that effort is wasted. I think we’re reaching a point where more and more businesses are feeling their way towards a hybrid programmatic approach that works for them.

Why bring programmatic in-house?

To understand why, let’s take a look at why in-house programmatic is becoming such a hot topic. When a form of buying goes from 5% of digital spend a year or so ago to over 50% of digital spend (the level of programmatic for many brands today), CMOs and CFOs quite rightly treat it with a far higher level of scrutiny. When all of the programmatic knowledge sits outside your business within an agency, you can’t really satisfy that level of scrutiny. It’s hard to interrogate exactly what’s being spent and what’s being bought – and hard to make informed decisions about whether your investment is really delivering against your objectives. When you have a serious asymmetry in knowledge, it very much restricts the value you can get from any partnership.

Programmatic’s transparency issues

It’s a particular issue for programmatic because of the transparency-related challenges that this method of buying has consistently thrown up. To quote just some of the stats doing the rounds at last week’s conference, ad fraud currently accounts for between 20% and 30% of programmatic ad buys, and only 46% of programmatic ads meet viewability criteria. Given these issues, it's not enough to know how much you paid for how many clicks or how many impressions. You need to know where the impressions happened, what audiences they happened amongst, and how much they were really worth to you. Most marketers would be willing to pay quite a bit more for impressions that they can be confident are from human beings – and the right kind of human beings at that; if they know they will deliver meaningful leads – and revenue-driving conversions. They can only get that confidence from being able to peer into the programmatic black box and see what’s going on.

The costs of bringing programmatic in-house

Bringing programmatic in-house certainly provides that visibility. However, it comes at a price. There are risks involved in hiring the right talent in an area where there is still a scarcity of qualified people; there are the costs of building a team and an infrastructure internally to the standard you would have had available through your agencies; there are the scalability issues, the need to build relationships with a range of Demand Side Platforms (DSPs), not to mention with those publishers operating private auctions, in order to access the audiences that you need. There are also a lot of decisions to be taken: should you build your own technology stack or rely on building relationships with DSPs? How can you ensure that the tech you choose doesn’t become obsolete? Which Data Management Platforms (DMPs) should you work with to optimise campaign performance? How can you get your internal data into the form that you need?

It’s why the move to bring programmatic in-house isn’t yet a rush. Of all the companies speaking at Get with the Programmatic, only Morgan Stanley had completed the process of bringing programmatic in-house. Head of Digital Experience, Simon Murray, told our panel that it had taken the business a year to start to get to grips with being its own programmatic agency.

Can other brands afford to wait as long? They may not have to. The essential first step in meeting the challenges of bringing programmatic in-house is to hire people who are fluent in programmatic and understand the strategic considerations involved. You’re looking for a particular breed of hybrid marketer: people with the ability to work with data, oversight of the different technology platforms involved, but also a strategic marketing sensibility that matches all this with a clear sense of what your objectives require. The irony is: once you have those people on-board, you have already started to redress the imbalance in knowledge that is the main reason why you needed to bring programmatic in-house in the first place. The act of bringing programmatic knowledge in-house means that you have much less need to bring programmatic execution in-house.

Matching in-house programmatic knowledge with agency value

If a business can have a strategic discussion about the objectives for a programmatic campaign; if they understand how they want to measure success; if they can ask searching questions about which platforms their ads are appearing on and why, then they can start to work far more productively with their agencies on making the most of programmatic. I think that many businesses will find that this is the working relationship that suits them best. They’ll have taken the necessary first steps for bringing programmatic in-house – and given themselves the option not to take the rest of those steps. We’ll see a happy hybrid model emerging.

Every business should be able to have an informed strategic discussion with their agencies about what their particular objectives are, which types of impressions they are interested in, and which programmatic buys and media partners are best suited to delivering those impressions. When they are able to have those discussions, they will be far better placed to benefit from the genuine advantages that a good agency can bring to the programmatic table: efficiency, scalability and expertise in answering the strategic questions that a business with in-house programmatic knowledge knows to ask.

As soon as you start taking steps towards establishing in-house programmatic, you will start chipping away at the business case for it. The journey towards in-house programmatic isn’t one that you have to complete in order to benefit from it. That’s ironic – but in a very good way.