ANA Report: Marketers Expand In-House Programmatic Buying

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2017 ANA - Bob Liodice
2017 ANA - Bob Liodice Credit: Clarion Pictures

Marketers are rapidly taking programmatic buying into their own hands.

That's the finding of a new study from the Association of National Advertisers, which said that 35 percent of marketers surveyed have expanded their in-house programmatic media buying capabilities -- in the process reducing the role of external agencies. The survey was conducted in June and July with 149 client-side marketers. About 52 percent of respondents worked at companies with media budgets of $100 million or more.

The 35 percent figure is more than double than what was reported in an ANA report in 2016 (last year conducted with Forrester)—in which 14 percent of marketers said they were reducing the role of an external agency partner as a result of in-house expansion.

It's clear the need for transparency is driving the change. The number of respondents who said they have an "undisclosed" programmatic model with their agency -- where an agency does not disclose the actually winning bid price for media purchased for an advertiser -- dropped in this year's survey to 19 percent from the 2016 study's 34 percent. The earlier survey was based on February 2016 data, before the ANA released its bombshell transparency report in June 2016 that claimed cash rebates and other non-transparent practices were pervasive in the U.S. media-buying ecosystem.

Major brands including like Kellogg and Netflix have brought some programmatic capabilities within their own organizations in recent years, citing the ability to harness and protect their own data. P&G has also taken control of some of these capabilities.

But though this may becoming more common, some say marketers may not stick with it. "There will be many marketers who bring work in-house or work with a third-party and realize that they don't want the responsibility that agency-like businesses have, and they'll eventually fold [those responsibilities] back into a traditional agency model," predicts Pivotal Resarch senior analyst Brian Wieser.

Taking programmatic in-house isn't easy: Companies need the budget, talent and bandwidth to bring these capabilities in-house, the ANA report says, and many marketers opt to partner with technical experts to plan and execute campaigns.

And that talent is important. "A platform is not a replacement for great analytical human beings," says Ric Calvillo, CEO of Nanigans, a company that builds software for measuring and optimizing digital ad spending for in-house marketing teams.

Calvillo says some of the main reasons marketers are seeking in-house capabilities are because of control and better efficiency.

When working with an agency or third-party business, "If you're not comfortable giving them complete revenue transparency or complete data on all your customers ... there is a limit to how efficient that agency can be," he says. "An in-house effort can optimize for true profitability and revenue growth as opposed to marketing metrics that may or may not mean anything for your business."

Dan Rosenberg, chief strategy officer of MediaMath, which offers a widely used digital ad-buying platform, says programmatic's popularity is only going to continue.

"Programmatic, and the promise of programmatic, are really starting to take hold and become much more mainstream," he says. "The ability to have really tailored conversations with customers and potential customers across all touchpoints in real time, at scale, using all your data and being able to measure it all -- has this real promise."

He says that's likely to continue. But for now, he says most marketers are still relying on their agencies to navigate this world.

"For most marketers, the answer still is: I want to work with my agency to help me figure this out, help me choose which vendors I need, and help me implement it, and even help me operate it," he says. "That's what we see as primarily the model, but we do see advertisers getting more engaged [in their programmatic buying] and getting smarter about it and wanting to be more involved."

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