Charting A Path To In-House Programmatic

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marcgrabowskinanigansData-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Marc Grabowski, chief operating officer at Nanigans.

As the slow death of media-buying agencies continues*, a growing number of marketers want to own their data and bring all buying in house. They simply need some direction to develop this competency.

The five most prevalent motives for advertisers to bring their programmatic buys in-house include:

  1. Ownership of data
  2. Cost efficiency
  3. Prioritization of objectives
  4. Transparency
  5. Owning the core competency

Ownership of data. Brands recognize the importance of their site- and user-level data. They want to make sure the data is used for their campaigns and never for competitors or their agency's independent gain. Additionally, with retargeting specifically, brands are fatigued with paying networks a margin to leverage their retargeting segments of users attracted to the brand without that retargeting network.

Efficiency. Much of the work done in retargeting can be automated and there is little logic in paying a severe tax above inventory cost to reach a user who you prospected initially.

Prioritization of objectives. Is it more important to achieve performance (cost and value) metrics or spend your allocated budget? How much volume justifies a decrease in your performance metric? When is the right time of year to shift to a more flexible outlook? All of these decisions are made by executives within the brand and then have to be relayed to a services company. Do they always execute to your expectations? Is your agency motivated to cut spending even though this will lead to smaller billings for it? When you control the spending in-house, you can make and execute these decisions.

Transparency. This refers not only to transparency of inventory but moreover the transparency of the bidding. An advertiser wants to know where it is bidding and what motivates its bids. If the bid is increased, it wants a record of the increase and justification for the increase. If the brand isn’t competitive, it wants to understand how to increase its ability to compete in the future.

Core Competency. For companies that pride themselves on efficient user acquisition and retention, it is important to “own” the expertise of acquiring and retaining customers. The importance is magnified in the example of companies with aspirations of going public or those looking to raise their valuations (for potential acquisition). If a company can show it has core strength in performance campaign oversight as well as data manipulation and is not dependent on outside resources, it will look more attractive in the eyes of both the private and public investors. Conversely, markets may frown on companies that rely heavily on external resources for such a pivotal part of their business. Imagine a creative agency that outsources all of its creative – this seems to be diametrically opposed to its value promise.

If you accept these arguments for bringing programmatic buying in-house, what are the steps to execute the plan?

Hire Great Athletes

During my college days I played rugby. Most players on the team had never picked up a rugby ball or even so much as watched a match prior to university. As a result, it was impossible to recruit people with strong relevant experience. Instead we recruited strong athletes, those who had experience in football, track, soccer and wrestling. These athletes had both the physical ability as well as the mental toughness to succeed on a rugby pitch.

From a marketing standpoint, this is easier said than done, as you may have to shift your staffing profiles from experienced marketers to less experienced professionals with strong analytical skills. Gone are the days when creativity alone makes a good marketer. To be effective in programmatic media you will have to staff your team with quantitative analysts who can recognize and interpret trends, adjust bidding and build segmentation informed by performance. Additionally you will have to look for technical operations resources to quickly place pixels, integrate with third-party tracking tools, build mobile SDKs and debug volume/performance discrepancies.

Arm Your Team Effectively

Even with a fully staffed team with incredible pedigrees, you’ll need to arm your organization with workflow-management tools, automation and reporting allowing them to maximize their effectiveness. Otherwise it is as effective as sending a Navy Seal into battle armed with a butter knife. They are still more effective than the average human but will execute far under their potential.

Develop Regimented Training

The best athletes always play better under great coaching. Hiring talented people and providing tools will have limited value unless you undergo the training rigor that is required to learn complex toolsets and understand market dynamics. Training should span advertising (search, display, social), data sources, the supply stream (ad sizes, user behavior), technical implementation (pixels and ad serving) and the system you select to build, target and optimize ads.

Taking control of your programmatic buying is not a quick process. It takes commitment, planning and often cultural realignment to successfully execute the strategy. The benefits will be massive -- and accompanied by mistakes along the way.  Do not try to reduce all reliance on service companies immediately, rather identify the functions that will add greatest long-term value to your business and map the dependencies to bring those functions in-house.

*Note: this does not refer to all agencies or services agencies. This refers specifically to organizations that provide tactical services around media buying without a strategic vision for a brand’s holistic advertising needs. There are many service companies who provide value above and beyond sourcing inventory and marrying that inventory to generally available third-party data. I am not condemning all services companies but raise these questions for brands to consider where they receive the greatest external value and where it is better to develop these practices in-house.

Follow Marc Grabowski (@MarcTGrabowski) and AdExchanger (@adexchanger) on Twitter.

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