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, was speaking at the ATS London conference.
Sean T. Smith for Adweek

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.

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