3 Ways to Avoid Fluctuation Between In-Housing and Outsourcing Programmatic Media

The back and forth actually costs more than any projected savings

Companies will benefit from figuring out to increase longevity in their efforts rather than seesawing between in-housing and outsourcing.
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I’ve spent a great deal of time in field marketing, and one thing that always amazed me was the centralization/decentralization seesaw. Whoever happens to be in charge of field marketing at headquarters decides that either centralized marketing would lead to more control, or we’d save money with decentralized marketing. If the status quo is centralization, the push is to move toward decentralization and vice versa. Then, rinse and repeat. It always sounds rational but ends up mistaking motion for progress.

We’re in the relatively early stages of marketers in-housing programmatic media, if not other media as well. Those in-housing today assuredly see the trend as linear (more in-housing) and not circular, where media is eventually outsourced again. I wouldn’t be so sure. Whichever way your organization is headed today, there are a few simple things that can be done to prolong the longevity of your efforts.

Cost-savings versus off-the-books

Most marketers will claim in-housing will provide cost savings. It certainly should, as an in-house employee is paid a salary. But marketing is an investment, not an expense. If we lower the expense by 40 percent but then lower the return by 50 percent, in-housing has been an exercise in being penny-wise. Will an in-housing organization do a full ROI post-mortem, including all costs? Additionally, the “savings” also significantly inflates internal headcount and marketing salary expenses, which can make department leaders and managers targets when the next round of cost-cutting comes around.

Marketers quickly end up realizing that most non-working media technology fees will still be needed once programmatic is in-house.

If cost savings is a core reason for in-housing, every campaign report, every budget, every invoice should be configured to show the ongoing savings so that finance doesn’t start to question the apparent increase in internal expenses.

For those heading toward outsourcing, employment hiring and termination costs during seasonality or business cycles should be tracked since an agency will bear that burden for a client with no additional costs.

Eliminating non-working media dollars

A major reason often cited in bringing programmatic media in-house is the quest for transparency and avoiding ad-tech “taxes.” The assumption is that tighter control around programmatic, administered internally, will eliminate large portions of so-called “non-working media dollars.”

Five years ago this may have been the case, but it’s unlikely today. Successful, efficient campaigns can only be run without verification, brand safety, fraud prevention and other similar technologies if there exists tremendous engineering sophistication in the marketer’s organization. This is sophistication I’ve seen less than a handful of marketers across the U.S. exhibit. Marketers quickly end up realizing that most non-working media technology fees will still be needed once programmatic is in-house.

One question every CEO should ask before their CMO brings programmatic in-house is, “What if you’re wrong?” Because what if the non-working media dollar savings aren’t there or are just significantly lower than we expected? Do we seesaw? I think that question is far too rarely asked.

Isolationism versus specialization

Another reason marketers give for bringing programmatic in-house is that their brand requires specialized knowledge and/or is so different from the rest of the market that dealing with generalists is too difficult or unfruitful. Yet I also speak with marketers who outsource for the exact opposite reason: to gain better insight into best practices, even from outside their category. Even the most specialized industries can learn from other industries, but it requires changing the lenses we look through to see it.

All three of these reasons for in-housing or outsourcing can find middle ground, too. Brands can own the technical contracts to better ensure transparency but put the headcount and best practice harvesting at an agency. Blending points of view most often centers a brand, gives it the best of both worlds and prevents the seesaw activity that likely ends up costing more than the projected savings in the first place.