Transparency, Revenue and Data Control: How In-House Changes Advertising

In-house programmatic is quickly reconstructing the sphere of digital ad buying establishing new game rules for media agencies, programmatic chain participants and brands. According to the Association of National Advertisers (ANA), the percentage of advertisers who switch to in-house purchases is constantly growing and thereby the role of media agencies in the purchase of ad inventory reduces rapidly.

Before in-house jumped on the radar, the advertisers and publishers were bound by a single collaboration scheme swarming with way too many intermediaries. When launching the ad campaign,  the brand would typically use up the greater part of their ad budget because of uneven money distribution inside the programmatic chain or commission shares consumed by agencies.

The problems that drive the trend

The agencies. Relying on an advertising agency is a perspective which looks way too appealing for the brand since responsibility for the result can be totally delegated to third-party professionals. Specialists from agencies are well-versed in traffic attraction, they also know the tools and how to perfectly navigate the latest advertising industry trends with all the ins and outs.

The problem is, every business has unique processes, specific target audiences and ways of interacting with them. In the agency specialists work with several clients at the same time, they have certain protocols of functioning that optimize the workflow but do not contribute to flexibility in case a brand’s objectives change rapidly.

As a result, companies are facing the situation when 50 to 80% of marketing budget goes to waste because of declining consumer loyalty, time losses and media fragmentation. Still, some companies hold a high level of tolerance towards these issues as long as they can shrink the ad campaign budget or choose a viable alternative.

The programmatic chains. While programmatic automation alleviates many struggles associated with manual ad buying and selling, it also has many surprises on the flip side.

Programmatic chain is complicated, as it includes multiple participants but is not limited to: the platform which represents advertisers (DSP), the platform designed for publishers (SSP), the digital marketplace connecting publishers and advertisers (Ad Exchange), and the platform used for collecting and managing data for digital marketing needs (DMP).

With every new entity involved in the process, the number of charges, fees and commissions increases. The total sum paid per 1000 impression is all an advertiser knows at the moment of the ad campaign launch. What part of that sum the publisher gets and what part is distributed between other entities remains a mystery.

According to IAB (Interactive Advertising Bureau), the sum that the publisher gets barely reaches 50% while the rest is taken by the programmatic vendors. Thus, financial transparency appears to be the most complex aspect of programmatic advertising for the publishers, advertisers and media buyers.

As the capabilities of the in-house approach broaden, the marketers embrace the new scheme quite quickly. If in 2016 only 14% of marketers reported being ready for the big shift, in 2017 this number more than doubled, climbing up to 35%.

Independent in-house approach is not only promising in terms of transparency and control over ad campaign results, it also means better brand safety and control over third-party information access, as data is not shared with other parties. The fewer number of entities with access to private customer information will result in a smaller chance of potential data leakage.   

In-house model as a revenue-grower

Some industry experts are concerned that big companies like Procter & Gamble or JPMorgan Chase are massively reducing their digital ad campaign budgets these days. Indeed, what appears as a reduction is rather a redistribution of funds. For example, such large brands as Procter & Gamble and Netflix have adopted in-house programmatic approach to optimize their budgets, avoiding invisible impressions and clicks generated by the browser bots.

Moreover, the positive half of the funds which disappears inside the long chain of intermediaries standing in between media buyer and publisher can be retained. Taking all marketing processes in-house is an opportunity for the advertisers to know how, where and when their creative product is displayed and create trusted publisher-direct relationships.

Apart from this, the following factors also positively affect the brand’s revenue:

• The fast access to the internal databases accelerates the cooperation process inside the company and leaves room for maneuvers in case of a rapid situation change. Having their own flexible individually adjusted technology, a brand is able to customize itself at any time to move faster towards changing the brand’s objectives.

• Having aggregate statistics and full information on customer behavior means the marketing team is wielding all essential data to focus on relevant audiences. They are able to craft individualized messages for the customer and therefore, maximize the marketing output.

• Adopted in-house technology minimizes the time and number of steps necessary for the campaign to start making procedures more agile: the time losses between planning, design, approval, testing, launch or analysis stages are getting minimized.

The cost of implementation

Transparency is no longer a perk available only to the large brands, as in-house solutions has evolutionized their ability to scale and adapt to the medium or small companies, and even for startups. The cost of in-house solution installation is only a tiny speck in the vast amount companies regularly sacrifice on media-buying. In-house technology is a lifetime investment that will be paying off in the long run and constantly able to adjust to the new rules dictated by the ever-changing advertising market.  

The outcomes

Advertising agencies are handling the work with brands in many different ways. In the same way as agencies, programmatic entities define the commissions for their services independently and not always clearly or fairly enough. An increased need for financial clarity and transparency makes many brands journey off in search of custom operation models that would offer more control over the media buying process. If the brand works with an in-house model, it embraces taking responsibility over its own marketing outcomes, gains full transparency on expenditures, campaign ROI and safeguards the customer data along with the brand’s image.

Author

Irina Kovalenko is a Chief Marketing Officer at SmartyAds LLC, a company specializing on developing cutting-edge programmatic platforms for ad buying and selling automatization.

Irina is an outstanding marketing professional whose deep knowledge and expertise hail from a multitude of disciplines and industries. Her background includes but is not limited to Ad tech, Inbound marketing, and she feels deeply passionate about sharing her experience and knowledge with the rest of the world.