In-housing media buying — part 2: Is it a miracle cure?

What does “in-housing” really mean for media buying?

Advertisers should understand that in-housing media buying does not mean recruiting a brand new team to take care of everything. It’s not an all or nothing game. In-housing can be done to varying degrees, depending on which link in the media buying value chain is concerned:

• Operating campaigns: Buy inventory and manage programmatic bidding
• Managing and contracting tools ( ad server, bidding tools, etc.): Traditionally, the agency almost always owns the contract while the advertiser does not own data collected through tools
• Measuring performance: Measure on- and offline conversions, attribute sales to different campaigns and advertising channels, and maintain dashboards that are required to monitor ad campaigns
• Media and data strategy: Define audience segments, adapt and personalise creative content, allocate budgets, define a bidding strategy, etc.

Advertisers often choose to adopt a hybrid system (or at least at first), with a mix of internal teams and on-site service providers (on a “time and materials” basis). This system means that the focus can be on operations, without worrying about underlying HR concerns.

Basically, there is not yet a clearly-defined path! Each advertiser should choose how and to what extent to in-house, depending on what will work best.

Why should advertisers in-house? What are the advantages?

If done right, in-housing can rhyme with transparency, efficiency, and agility in campaign management. It is a way to:

• Regain control of media strategy and avoid the black box effect.
  The main goal is to streamline media investments, which will bring better control across all campaigns beginning with the relevant tools, service providers, and teams. By taking ownership of data, advertisers recognise their strategic character as the very core of an audience strategy and performance measurement. Most importantly, this will provide greater clarity when it comes time to refine attribution models. In-housing expertise, on the other hand, will provide internal teams with greater knowledge and empowerment. Lastly, directly contracting tools and advertising networks will mean more transparency in media expenses and tool licenses. According to French newspaper Journal du Net, half of the top 20 French advertisers now have individual licences (in other words, they can conduct direct media-buying) for DoubleClick Bid Manager ( DBM), Google’s DSP.
• Increase efficiency and ROI by bringing advertising and business needs closer together.
  From briefing and planning stages to the purchase itself, closer teams means easier decision-making. Because teams are physically present, they can interact easily with other departments (such as CRM or product) and they can make better use of data to run campaigns reactively. The resulting shortened time-to-market for campaigns is therefore even more valuable for advertisers who are subject to short conversion and sales cycles (e-commerce, travel), and who must stay updated of the latest news in order to react accordingly. Air France and Club Med, for example, estimate that they have saved up to 20% in media costs after in-housing.
• Create a competitive advantage/set your business apart.
  Thanks to direct contracting and the absence of an intermediary, advertisers benefit from a special relationship with tech publishers and advertising networks. This in turn leads to greater reactivity when faced with new digital trends, which is valuable on a quickly-evolving market.

What are the major challenges of in-housing media buying? What are the keys to success?

Of course, one of the first obstacles is to convince the top levels of the organisation! After this is done, advertisers must:

• Find the right target organisation, the style of in-housing that best fits.
  This is no small feat, considering that there’s no established rulebook. It’s a long and gradual process which shouldn’t be under-estimated. It’s up to advertisers to find the format and rhythm that works for them, collaborating with the right service providers!

• Don’t forget about HR issues.
  Recruiting, training, and fostering employee loyalty are crucial steps, especially as job roles are often brand new and require extensive expertise. True talent can be tough and expensive to find, and even when found, talented individuals are sometimes reluctant to leave the agency world as it is an easier environment to nurture new skills and gain knowledge. It’s important to keep costs for internal organisation and training in mind.
• Be open to outside expertise.
  In-housing doesn’t mean isolation! Agencies bring real added value, as they generally keep up with the latest innovations in a quickly-changing market. It’s important to know when and how to ask agencies for advice, with compensation for time spent, for example.

For these reasons, it would seem wise to choose the right, experienced player to support transition – ideally, a neutral partner with concrete strategic and operational expertise in the digital world.

Will the in-housing trend spread to other players in the market? Is it for everyone?

The list of big brands and pure players that are in-housing their media buying is growing longer, and now includes Amazon, L’Oréal, Netflix, eBay, Meetic, Procter & Gamble, Unilever, and Warner Bros – and feedback is often positive (check out this video – in French – of a conference organised by fifty-five and EBG on the subject). The World Federation of Advertisers (WFA) recently found that that 21% of members surveyed were buying programmatic  in-house, or through a hybrid model. What’s more, 16% of members surveyed indicated they plan to take this step, too. Unsurprisingly, the most digitally developed industries are those that are most affected, such as e-commerce, media, and travel.

At fifty-five, we believe that this is a strong trend. But complete in-housing requires a critical mass, with sufficient media investment to justify investments in workforce and technology (purchasing and maintaining tools). Advertisers must carefully decide which segments to bring in-house according to their means and long-term strategy.

Check out the first part of this interview: In-housing media buying – part 1: What does it mean for the future of agencies?