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.”
Still, even with a wealth of first-party data, in-house agencies have significant hurdles to clear. Forrester principal analyst Jay Pattisall said they have “always struggled a bit when it comes to the talent war.”
UM global CEO Daryl Lee said he doesn’t think in-house agencies can “replicate” the “raw talent” that external partners attract. Even if they can, retaining the talent is a challenge as there’s not a clear path for in-house agency employees to take on C-suite roles such as CMO at a company.
“The ad-tech space is notorious for selling stuff that’s automated at the push of a button,” Corcoran said—and many clients would like to think the process is this simple. “But the reality is, we’ve added so many different technologies into the world that don’t necessarily talk to each other well, that have flaws and require a lot of human management.”
He said in order to “stay sharp,” programmatic experts need to “work across multiple clients, multiple types of businesses and across multiple categories using all different types of partners and tools.”