Contributor Kevin Lee discusses the pros and cons of large brands bringing some elements of programmatic media in-house.
Large marketers spending millions in annual programmatic and digital media spend have a number of good reasons for taking some elements of programmatic media in-house.
We’ll talk about the specific pros and cons of doing this later in this article, but for now, it’s important to acknowledge that there’s historical precedent for taking a hybrid approach to the agency/platform puzzle, in which the client owns the billing relationship and has login access to the paid media accounts.
How it started
The practicality of the hybrid approach evolved with paid search, where it wasn’t uncommon for large marketers — even those with agency relationships — to own their own Google AdWords and Bing accounts. The agencies (search, digital or other), along with any bid management platforms used, were granted access to client accounts using the Google AdWords manager account or similar API access after permission was granted by the client.
Media management, strategy and execution fees were negotiated independently on a percentage-of-spend basis or alternate fee structure. Because agencies also had access to reporting, it was easy for them (or the bid/campaign management platforms) to calculate invoices, especially if they were charging fees based on a percentage of spend. (Some agencies charge media management on a retainer or a hybrid of a retainer and a smaller percentage of spend).
Similarly, for most paid social, the advertising account is in the name of the marketer, not the agency or technology provider. One reason for this is that the social platforms were originally designed to boost or promote existing social posts via ad dollars.
Since that time, more ad formats have evolved within the social media platforms, with new ones being added all the time.
From Right Media and AppNexus to today
In the early days of programmatic display, there was only one player (Right Media), and like many agencies, we had our own seat.
When Doubleclick’s AdX 2.0 launched, we got a seat there, too. Even when we used AppNexus and Invite Media (which got bought by Google and became DoubleClick Bid Manager) to manage the bidding process for us and our clients, we owned our own seats. With the explosion of players in the Display Media Lumascape and the proliferation of demand-side platforms (DSPs), exchanges and other traffic sources, it became impractical for all but the very largest spenders to own the direct relationship with every relevant traffic source.
However, for most advertisers, there is still an 80-20 or 90-10 spend allocation across programmatic display, audio, video and native inventory sources. If the advertiser is uncomfortable with agencies controlling all the billing relationships, perhaps the most important traffic sources should be maintained with a direct billing relationship.
This direct billing and common interface relationship delivers several really important benefits to marketers. These benefits are compelling enough to suggest that marketers large enough to buy programmatically at scale may want to own the account/billing relationships with any exchanges they happen to use.
Pros for direct billing relationships/account ownership:
- Transparency. Costs are generally far more visible.
- Control. Changing agencies? Changing DSPs? No problem!
- Billing flexibility. Think you’ve got a great credit rating and purchasing department? Perhaps these can entitle you to get more advantageous payment terms.
- Cookie and/or device ID continuity. If the exchange is the one with the cookie and device ID data (often the DSP will have them, too), there may be some continuity advantages for you.
- An agency that is used to running PPC search and paid social campaigns may welcome its removal as a conduit for media dollars and be able to price its services more aggressively.
Cons for direct programmatic billing relationships:
- The DSP(s) you prefer may not be open to bidding on your exchange seat transparently. Some DSPs prefer you not use their systems and platforms to manage your own seats on exchanges.
Can and should marketers go further than simply owning their own seats at exchanges and forging direct relationships with the largest publishers? There is a lot of research that seems to indicate that the answer is “yes.”
For many marketers, the hybrid should extend to technology (including data management providers [DMP)] and BI integration), as well as the staffing of the teams to execute on the programmatic marketing strategy.
Here are some interesting statistics from a study done by the World Federation of Advertisers (WFA):
The programmatic in-sourcing trends portend great things for megabrands with over 100 million in annual programmatic and digital media spend. For smaller spenders, the benefits may accrue more gradually, but they all begin with owning one’s own seat.
Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.