How to Prove Value as Advertisers ‘Take Back Control’

S4 Capital chief Sir Martin Sorrell says that ‘every single client is looking at in-housing’

Sir Martin Sorrell, S4 Capital executive chairman, built WPP over 33 years. Sean T. Smith for Adweek
Headshot of Ronan Shields

The ‘in-housing’ debate, where brands ditch their agencies and bring those capabilities (whether media buying, creative or programmatic) under their roofs, has raged throughout the media industry over the last decade, ever since the potential to automate online ad spend promised marketing departments the ability to make serious savings on their media budgets.

Those in favor point out the historic high margins that media agencies—whose traditional value proposition was predicated on their bulk buying power—have charged, while detractors highlight the expertise such companies have amassed. And in the era of ad tech, the industry’s major holding groups were quick to amass programmatic know-how.

Industry sources often recount tales of grandiose in-housing projects abandoned mid-way as marketing departments gradually realize the execution and maintenance of such a vision is harder than it sounds.

However, according to Martin Sorrell, executive chairman of S4 Capital and the poster child of the contemporary holding group model, “every single client, without exception, is now looking at in-housing.”

The former WPP CEO spoke earlier this week at the annual ATS London conference, where leading ad-tech figures gather to debate the issues of the day. Here, he outlined his vision of a marketing services company that’s fit for the contemporary era.

S4 Capital is being constructed around the tenets of “faster, better, cheaper”—he spoke extensively with Adweek on this model earlier in the year—with the underlying rationale being marketers’ desire to “take back control,” he explained.

At its core, this movement is driven by marketers’ desire to have sole control of their first-party data. Historic instances of misuse of client data, such as agencies licensing it to third parties without prior consent, plus the ever-increasing power of platforms such as Amazon and Google has spurred many to contemplate in-housing aspects of their media operations.

“There’s tremendous pressure, and they’re looking at the best way of doing things, and fundamentally, this ‘take back control’ thing is really powerful,” Sorrell told attendees.

He went on to say, “From the pitches we’ve been involved in during the last three months or so, clients are experimenting more than I’ve ever seen before in the four decades or so that I’ve been involved in the business. There’s a degree of confidence now than there wasn’t a few years ago.”

Digital butlers

The formation of S4 Capital has involved the acquisition of programmatic talent, principally through the acquisition of MightyHive with the company’s competency in operating both the Amazon and Google ad stacks, leading many to describe such outfits as a “service layer.”

Per Sorrell, advertisers now demand expertise on said platforms, as this is where audiences spend the majority of their time—and where the richest pools of intelligible market data can be found.

When quizzed on S4’s status as a “butler”—i.e. servicing clients on third-party platforms such as the Amazon Advertising platform, as opposed to using bulk-buying power to negotiate preferential media prices—from the audience, Sorrell noted that scale is not the asset is used to be.

Simply put, “the butler has to be much more flexible as to what he or she is doing.” Sorrell then compared S4 Capital’s lightweight (but agile) infrastructure to the comparatively mammoth overheads of the legacy holding groups.

In-housing is not without challenges

However, in a separate discussion at the conference, panelists pointed out ‘in-housing’ is not the binary scenario the term would first suggest, i.e. dispensing with their media agencies to cut cost on their media budgets.

Anoo Mehmi, global digital content strategist at GSK, said bringing 100% of media-buying in-house would be “ideal,” but the reality of embarking on a “digital journey” is difficult given the scale of the task involved with procuring technology and the talent to use it.

“It’s not just a case of having a one-year plan to completely in-house all digital creative or media-buying, it just doesn’t work that way. That’s because we have departments that have been working in a very set way for a number of years and they need to be taken along that journey,” she explained.

For Ruth Zorher, who leads Mindshare’s relationship with global bank BBVA, the debate over whether to “in-house or not” is an extremely “basic question.” For instance, some marketers are opting for a strategy whereby they take ownership, not necessarily control.

Paul Evans, a consultant and former head of media at Vodafone who helped the telco overhaul its online media buying, explained to attendees how his former team attempted to take ownership of their data strategies.

“As the tectonic plates start shifting out, it’s not necessarily about control and transparency in media-buying, it’s about ownership … which has been enabled in the last few years,” he said.

“It’s about ownership of contracts, commercial relationships and media planning [not necessarily parting ways with a media agency].”

The data protection impetus

For instance, in an era when data privacy regularly makes headline news and has generated scandal after scandal, the impetus for marketers to take greater control over their data operations is apparent—especially as regulators get involved.

In a separate ATS conference session, Ali Shah, head of technology policy at the U.K.’s data protection authority the ICO, cast light on how ad tech may need to correct its ways.

Referencing a recent guidance note, he spoke of how the watchdog cross-referenced the mechanics of real-time bidding—the technical underpinning for much of programmatic advertising—with the principals of General Data Protection Regulations and found the two were not necessarily in harmony.

The ICO has been looking into how companies track U.K. citizens online in recent months, including consultations with each tier of the ad industry, which prompted Shah to observe some widely held “misunderstandings” among programmatic middlemen.

“They seem to be around transparency and consent with our second concern around how data is shared throughout the ecosystem,” he said.

“If information is being shared, then it needs to have the right data governance controls and technical components, and from what we found … we felt the controls were not robust enough.”

For while the ICO is reticent to use its regulatory powers, which includes fines of up to €20 million or 4% of annual global revenue under GDPR, if it doesn’t see a marked improvement in the space, they may be forced to take such actions, according to Shah.

Hence, the imperative for brands to take ownership of their data while partners can make use of it (given certain measures of control are in place) is apparent.

@ronan_shields Ronan Shields is a programmatic reporter at Adweek, focusing on ad-tech.