In our new-trend-hungry industry of digital marketing, the concept of ‘in-housing’ programmatic media buying is generally discussed from the perspective of Advertisers taking over the buying execution from their Agency. Undoubtedly, this is an accelerating trend, as evidenced by stats from numerous surveys.
However, the older trend of Agencies ‘in-housing’ this function themselves is not yet complete for many. Indeed, the sluggishness of some Agencies to adapt to the reality of what the RTB revolution made possible a decade ago frustrated some Advertisers into ‘leapfrogging’ their Agencies in this respect. Certainly, the outmoded agency commercial models were/are not conducive, but it would be a disservice to Agencies to pretend that all Advertisers were in a hurry to put in place something more progressive.
The advent of Real-Time Bidding, was supposed to enable ‘media buyers’ in Agencies to perform the function that their job title suggested they already did rather than simply handing over budget to Ad Networks to run the activity themselves. What’s more, this could be done in a more scalable fashion than the Ad Networks. However, in many cases, the media buying function was simply redirected to programmatic trading specialist organisations, thus not substantially changing the drawbacks of the Ad Network model in terms of transparency (the specifics of the ‘trading desk’ approach of the big 6 Agency holding groups is a topic for another day, many years ago). RTB is now a term that has colloquially been replaced in most quarters by the less specific ‘Programmatic’, which is vague enough to be more future-proof in the short-term, but itself increasingly irrelevant as a differentiator with the inexorable march of digital.
The 6 themes that drive agitation over who owns the programmatic buying function are all regarding control. That is, control of:
The trouble with Agency ‘media buyers’ outsourcing their own function is that the Agency loses ultimate control of all of these. This is not a good situation for the Agencies, but is worse for the Advertisers who do not even have a direct commercial relationship with the entity that has control over the 6 areas that matter most to their marketing approach. Thus, some forward-thinking Advertisers have chosen to short-circuit the process.
However, assuming the responsibility of programmatic buying is not necessarily an ‘all or nothing’ shift. There are 2 core areas of responsibility and the dynamics around who owns which becomes interesting where a different party has ownership of each. The 2 areas are:
That is, firstly, ownership of the contract with the manufacturer/reseller of the DSP technology and, secondly, ultimate control over who is implementing the changes within the platform.
When it is the same party that owns both aspects, the implications are clear. Agency ownership leaves Advertisers without control of their digital destiny. Advertiser ownership leaves Agencies with no role to play and days numbered for value that they can offer as progression of programmatic enablement in terms of formats and channels continues.
Therefore, we are left with 2 scenarios of ownership where the nuances are worthy of exploration. In both cases, the Advertiser owns the contractual relationship with the manufacturer/reseller of the DSP tech, but not the execution. This is given that an Agency owning the contractual relationship, but not the execution has never really been a feasible long-term solution for any party.
The 2 scenarios are where the Advertiser has outsourced the Media buying to either an Independent Digital Trader or their Agency of record.
Tomorrow, in the 2nd part of this blog series, we will examine the implications for both the Agency and the Advertiser.