Advertising Week 2014

Why Netflix and Kellogg Took Programmatic In-House

Shedding Light on One of Advertising's Most Secretive Practices

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Keeping automated ad buying in-house, rather than letting outside agencies handle it, helps marketers move quickly -- and keep their consumer data to themselves.
Keeping automated ad buying in-house, rather than letting outside agencies handle it, helps marketers move quickly -- and keep their consumer data to themselves.

Brands often don't like to talk about how and why they handle their high-tech ad targeting and buying internally. It's a sensitive topic given their agency relationships and, in some cases, viewed as a competitive advantage. But two marketers with the practice in place, Netflix and Kellogg, opened up about their efforts at Advertising Week.

The merits of establishing an in-house programmatic team should of course be weighed on a case by case basis, but some key points emerged:

Protect your secrets (and act on them them)
Kathy O'Dowd, senior manager of programmatic buying at Netflix, said the company's in-house programmatic practice allows it to quickly act on information it wouldn't be comfortable sharing with an agency. "There's a lot of intellectual property that we want to keep internal. And that's made a lot easier when we're internal," she said, speaking of her team. "We really get the inside scoop and we're able to take action on that, and that's key."

Data at the center
The ability to harness and protect data came up multiple times. Aaron Fetters, director of the Insights and Analytics Solutions Center at Kellogg Co., said that Kellogg's in-house operation brought the company into better touch with its "first party" data (meaning: its own). "We've learned a lot about the value and power of first-party data," he said, citing customer relationship management tools and a brand's own website as sources of important information ready to be tapped.

Better internal collaboration
At Netflix, the programmatic buying team sits next to the social team and the paid-search team, leading to better cross-departmental communication. "We really share a lot of insights together and that is so valuable," said Ms. O'Dowd. "Having that proximity is much more difficult with an agency."

Agencies still play a role
"We work very closely with our agency," said Ms. O'Dowd, in what registered as a surprising statement given the rest of the discussion. Netflix's media agency, MEC, oversees the company's highly custom direct buying. "If there's a custom creative unit that requires a lot of hand-holding and work, that's perfect for them," she said. Netflix will also go through its agency if has differentiated access to data or better pricing, she said.

An emerging focus on ad effectiveness
"We started off as an efficiency play," said Mr. Fetters, describing the initial intent of Kellogg's move. "We now want to pivot and start to focus on effectiveness. So how do we use all the capabilities that programmatic tools and data have to offer to begin to drive the effectiveness of our advertising."

It's a culture thing too
Netflix is a tech company at its core, Ms. O'Dowd said, making its culture right for bringing a programmatic-buying operation in house. "A good question to ask from the outside is 'Does my culture support an in-house team?, she said. "A good proxy for that would be looking at other organizations within yours, other divisions within your organization that are successful -- which could be outsourced but aren't -- and asking why they have support, what makes them successful?"

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