Why Are Companies Choosing Programmatic Self-Serve?

tomflanagan“Data-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 Tom Flanagan, director of strategy at DataXu.

The list of giant brands announcing major programmatic initiatives is growing long, with Mondelez, Procter & Gamble and American Express joining “old-timers” like Kellogg’s and Netflix.

We know what’s driving the programmatic shift: It’s about more than cheap media acquisition, as the Winterberry Group pointed out earlier this year. It’s a particularly insightful way for you to learn about your audience, optimize messaging, discover new pockets of demand and stitch together the customer buying journey – all super strategic stuff.

But those benefits accrue whether you run programmatic in-house or through a partner. So what’s driving the urge to go self-serve?

Working in the space for nearly four years, I’ve seen people express many reasons for going both ways. Here are a few.

Speed To Insight

Programmatic platforms generate enormous amounts of data, and the better platforms have great tools for working with it. I hear a lot about frustration with partners taking days, weeks or months to process that data. In some cases, they fail to even understand what the data are really saying. Speed – or its opposite – can kill. Going in-house offers the promise of immediate access to the data by the team with the greatest understanding of it. The faster you can activate data, the more competitive advantage you can gain.

Partner Simplification

“Vendor Juggling” is not listed on most people’s resumes, yet it has become a necessary, if unfortunate, skill for marketers. By contrast, programmatic platforms relieve vendor management stress by subsuming a variety of point solutions into a single integrated software stack.

One way to evaluate this particular benefit is to assess your organization’s ability to do the things your current partners handle. Would you characterize your team as digital natives who do their own search and have few legacy marketing operations? Signs point to “yes.” Do you have companies with decades of tradition reviewing quarterly media readouts? Go slow. You might be able to garner most of the benefit without going self-serve simply by reducing the number of vendors and consolidating media buying.

Another consideration: Are you ready for the neck you choke to be your own? Who troubleshoots the misformatted tag sheet that prevents the campaign from spending? Who negotiates with the enabling ad exchange when a private marketplace deal accidentally buys bot traffic? Who do you yell at when your CPA isn’t hitting projections? Many firms outsource digital media execution as grunt work. If you like having an agency or DSP manage these headaches for you, self-serve may not be the best fit.

Cost Savings

One of the most common arguments I hear for going in-house is that it spares you the DSP and agency management fees that result from your DSP or agency running your campaigns on your behalf. That’s more money to spend acquiring actual media and reaching additional prospects.

The flip side is that in doing so, you trade service fees for full-time equivalents. Someone has to run that budget, so expect to fund one or more incremental full-time equivalents to plan, launch and optimize your programmatic campaigns. You’ll likely need someone else to interpret the data for actionable insights. And if you really plan on spending a lot through programmatic, you’ll probably need an operations person to manage things like private exchange deals and payment reconciliation.

One word of warning: Those roles won’t come cheap. Platform operator. Media data scientist. Programmatic ad operations. The job titles are so new that the talent pool is thin and candidates command high salaries. You will need to compete for good talent. Expect to pay for it.

So how do you resolve this conflict? If you’ve negotiated a solid long-term deal with a trusted partner, with strong financials and the chance to learn about programmatic, that probably beats funding a self-serve team from scratch, unless you’re a massive digital advertiser looking to take a big chunk of your marketing into programmatic. Then, economies of scale from both a cost and learnings perspective might tilt the scales toward self-serve.

This leads me to the last thing I’ve heard often. The learning curve can be long, so don’t assume the choice you make is final.

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

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