So You Want To Build An In-House Trading Desk?

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mikezemanbrandaware“Brand Aware” explores the data-driven digital ad ecosystem from the marketer's point of view. 

Today's column is by Mike Zeman, director of North American digital marketing at Netflix.

It comes as a surprise to most publishers, ad-tech firms and other marketers I speak to that Netflix operates its own internal programmatic trading desk. In other words, we employ strategists and tacticians for all API-based buying channels - SEM/paid social/RTB across its various channels.

This is understandable given that few companies plan and buy their own reserved media, let alone the more nuanced subset of programmatic. And, while I expect that this scenario will continue to be an anomaly, I do think there is a certain profile of marketer that will be taking a hard look at the “build” scenario is coming months and years. Why? There is the potential to realize several benefits when managing your own programmatic operations:

  1. You own the intellectual capital, data and insight that programmatic marketing unlocks.
  2. Your decisions on how/where/when to buy are always based on expected return.  For example, you are much more likely to try and tease out the true incremental value of remarketing if you are not incented on spend volume or percent of media.
  3. A one-size-fits-all product approach may not properly reflect your unique business situation and needs.
  4. There may be value in having close proximity of your first-party data to the activation of that data in your marketing.
  5. There is the potential for greater agility in marketing across channels. In other words, you might find that real-time budget shifting between search, paid social, and various RTB channels (display, mobile, video, etc.) is simply easier to manage and execute if client-side traders are operating in proximity and off a single budget.

Some are no doubt reading this as an indictment of outsourcing this function to either a third-party trading desk or managed service DSP, PMD, etc. Not the case.

The reality is that those models are going to be far better options for the vast majority of advertisers. First, such partnerships enable access to some of the best minds in data-driven marketing. Second, there are potential benefits to aligning your trading operations with your reserve media buying ... both online and offline. (For example, it may enable you to negotiate favorable private marketplace rates as part of a linear TV upfront).

Third, agencies in particular can offer material benefits as a result of the sheer volume of their overall media-buying scale (preferred access to premium inventory, added-value research, etc.).  Finally, running an in-house operation is not at all as simple as signing up SaaS partners and lighting up your buys. There is much more required than the simple "greens fee" of having access to platforms and inventory.

In fact, there a number of questions a marketer should evaluate and ideally achieve before committing to a "build" project:

  • Do you have (in-house) engineering, ad tech, data sciences and marketing analytics support organizations allocated to the initiative? Simply put, the partners to marketing in this endeavor are as important as the team “pulling the levers” if the opportunity is to be maximized.  (I would argue this tips the odds for success more toward tech/data-heavy marketers such as financial services, retail or ecommerce.)
  • Do you have the clout that only comes with a sizable marketing budget?  Regardless of the fact that programmatic buying is an auction-based arena, it is still the potential for robust spend that enables the commitment from third parties (DSPs, DMPs, etc.) to shape their product road maps based on your needs. It is also this economic clout that sets the foundation for a successful network of private marketplace/direct deals on the inventory side of the equation.
  • Are you willing to take on more than just one programmatic channel? For the in-house model to realize its full potential, a marketer should assume management of all API based buying across screens and formats (search, mobile, video, display, social, etc.). Only with this full purview can the synergies of these channels be maximized. For example, you may find that a certain type of copy works well in the search that can be quickly ported to paid social. Or you might find that a certain targeting category on Facebook or Twitter can be replicated in near real time with third-party data on the open RTB exchanges.
  • Do you have full buy-in from the organization and a long-term view? Success won’t come over weeks or even months. It can take several quarters of testing, analyzing, iterating and optimizing in order to realize expected benefits.

Admittedly, some of these hurdles are easier to achieve than others. And, it may be possible to succeed without a perfect four out of four. But, one thing I am sure of is that the in-house option will not flourish without the right talent. The talent to architect the right technology solution. The talent to extract true insight from data. The talent to know what to ask of your platform partners. The talent to guide individual channels but also understand how they fit into the bigger marketing picture.

If you are seriously considering the build scenario, determining whether you possess or have the means to source this talent is as good a place to start as any.

Follow Netflix (@Netflix) and AdExchanger (@adexchanger) on Twitter.

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2 Responses to “So You Want To Build An In-House Trading Desk?”


  1. Nate Carter says:

    Excellent post. In essence it is the in-house agency discussion of years past now fast forwarded into the modern era of media buying.

  2. Marcus Pratt says:

    Great post Mike - excellent points here for any advertiser to consider, but I really can't stress the need for the right talent.

    I suspect your previous experience on the trading desk side has made it easier to manage this group. Finding staff with this expertise can be difficult, but there are more and more qualified individuals with hands-on programmatic experience who may be interested in working on the client-side.

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