Why Media Agencies Think Clients Will Come Crawling Back After In-Housing Services

During the ANA’s Masters of Marketing Conference in Orlando, Fla., late last month, the heated debate over what benefits clients gain from taking work, especially programmatic buying and data analytics, in-house raged on. The conference followed a recent report from the ANA revealing 78 percent of brand marketers now have some sort of in-house operations.

And then there’s a secondary debate from media agencies, clients and analysts over whether the ANA’s report is all hype.

“Is it a trend? Is it going to continue happening? We shall see,” said 4A’s president and CEO Marla Kaplowitz, who described the fact that 90 percent of brand marketers surveyed employ an outside agency as “more telling.”

Still, the report also found that 90 percent of in-house agencies saw their workloads increase in the last year alone. In the past three years, 40 percent of data and analytics and 26 percent of programmatic shifted from external agencies to in-house hubs.

One senior media agency executive who spoke on condition of anonymity said he views the trend as “overblown.”

“I have some clients that are leaning really heavily in on talking about in-housing media capabilities,” the exec said. But when he presses them on how they plan to develop the relevant technology, recruit and retain the best talent or calculate the cost benefits, they simply don’t have an answer.

He added that many people don’t realize that agencies offer clients discounts on services like “the syndicated data sources required to run in-house media platforms,” charging half price for ad operations and one-quarter for ad tech.

Still, an increasing number of brands are trying to handle it themselves, more so because they desire to control first-party data than because they need to cut costs or are concerned about transparency, according to nearly all the executives interviewed for this story. The executives cited most clients that do attempt to take programmatic in-house come back seeking assistance managing it within a six-month to two-year period, leading them to work in tandem with external partners on execution especially.

GlaxoSmithKline (GSK) is one example. While it recently sent its nearly $1.6 billion global media account to Publicis Media following a review, as part of that process, it took all planning work in-house.

“One of the selection criteria was an agency who embraced our thinking and would partner with us as we build the in-house capabilities,” said Scott Grenz, vp and global head of media, GSK Consumer Healthcare. “Looking ahead, we’re excited about the potential for in-house programmatic digital buying. If we can leverage technology and automation at the right balance, we can refocus our agency talent more on high-value work that will drive the business and deliver further efficiencies.”

Following its third-quarter earnings, Publicis Groupe CEO and chairman Arthur Sadoun said he always recommends that clients “own their data.” Still, few are adept at understanding and managing those numbers.

“There are leaders like Netflix that may be sitting on a ton of first-party data,” Wavemaker U.S. CEO Amanda Richman said in reference to the fact that only Netflix has access to the numbers reflecting its own users’ behavior. “Programmatic is really how they operate as a business, so that looks very different from CPG organizations.”

Sean Corcoran, evp, executive director of the Americas at Mediahub (the media arm of MullenLowe), said he has only one client that’s mastered the practice, although he declined to identify which. (Netflix is a Mediahub client.)

“We invested significantly in technologies and talent to enable us to bring programmatic digital media buying in-house a few years ago,” said Louisa Wee, vp, marketing strategy and analysis and programmatic media buying at Netflix. “This has helped us significantly increase the velocity of learnings in this area and more deeply partner with supply-side partners.”

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This story first appeared in the November 5, 2018, issue of Adweek magazine. Click here to subscribe.

Lindsay Rittenhouse

@kitten_mouse

Lindsay Rittenhouse is a staff writer at Adweek, where she specializes in covering the world of agencies and their clients.