ARE YOU REALLY READY TO IN-HOUSE

Transcription

1 ARE YOU REALLY READY TO IN-HOUSE PROGRAMMATIC? WHAT MARKETERS NEED TO CONSIDER BEFORE DECIDING UPON THEIR PROGRAMMATIC OPERATING MODEL MAY

2 UK Programmatic Digital Display Ad Spending billions of, % of change and % of total digital display ad spending* 198.0% % 200.0% Programmatic marketing revolutionised the way in which display media is transacted globally. The introduction of technology and data into the buying and selling of this medium has led to significant benefits for marketers. Marketers are now able to better target the right customer at the right time with the right message. These benefits have driven growth in programmatic adoption and as such programmatic has become an increasingly important topic for a marketer to be aware of % % However, programmatic is no longer simply a tool for powering the display channel, programmatic now covers areas such as search, social, video and mobile. In essence, any medium which can be bought using data and technology is now considered programmatic % 66.2% 70.0% 59.0% % 50.0% 37.0% 24.0% 0.0% Programmatic Spend % Change % of total display spend* Given this rise in programmatic adoption we now see a number of marketers creating a programmatic practice within their own organisation, typically known as in-housing. This has largely been driven through commercial transparency as historically third party programmatic operations have operated in a non-transparent manner this means that the marketer is unsure on what is actually adding value in delivering their business goals. Note: digital display ads transacted via an API, including everything from publisher-erected apis to more standardized RTB technology; includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets. *includes banners, rich media, sponsorship, video and other Source - emarketer Sept 2015 The creation of an in-house programmatic team should not be taken lightly, there are many things to consider before embarking on this journey. This document is to act as a starting point to help brands understand if they are in the position to consider bringing programmatic in-house or if they require some fundamental changes to their setup before doing so.

3 THERE ARE DIFFERENT LEVELS OF in-house PROGRAMMATIC 3 HIGH It is commonly cited that there are many levels to having an inhouse programmatic operation - we believe in-housing programmatic boils down to how much of the resource and how many of the commercial agreements an advertiser owns themselves (in relation to their programmatic activity). Has employees operating programmatic technologies 100% in-house It s important to note that for many brands a 100% in-house model may not be appropriate and a different model of in-house programmatic may be more appropriate. LOW HIGH Handles the decision making and contractual relationships with technology, data and inventory providers

4 MAPPING OUT YOUR PROGRAMMATIC ASPIRATIONS 4 HIGH We recommend advertisers plotting where they are today and where they want to get to using our in-housing graph. There are three use cases pre-populated to help: X X Orange: an advertiser which today relies on intermediaries to handle all commercial relationships and resource requirements - they have the ambition of taking greater control over the commercial relationships but are happy with intermediary resource Red: an advertiser which today has one expert in-house, but all commercial relationships are handled through an intermediary - they have the ambition of building a team in-house and would like to handle all commercial decisions Purple: an advertiser which today does everything through intermediaries they have the ambition to have resource in-house but contracts will be handled by an intermediary (as they will likely be able to get better rates) Has employees operating programmatic technologies LOW XX X Handles the decision making and contractual relationships with technology, data and inventory providers X HIGH

5 FOUR PILLARS TO DELIVER 100% in-house PROGRAMMATIC EFFECTIVELY 5

6 100% in-house PROGRAMMATIC REQUIRES ANSWERS TO FOUR QUESTIONS If you answer yes, you can move to the next stage 6 YOU SHOULD BE CONSIDERING CREATING AN IN-HOUSE PROGRAMMATIC TEAM TECHNOLOGY 4 Do you have unified tech systems (such as; adserver, CRM & measurement) globally? MEASUREMENT 3 Do you have a marketing effectiveness team either internally or externally? TALENT 2 Do you currently execute any programmatic channels* in-house? INVESTMENT 1 Do you spend greater than $20m globally on display, video and mobile? *Search, display, mobile and video

7 7 INVESTMENT CONSIDERATIONS It is estimated that within the programmatic value chain there is only ~40%(1) of a marketers budget that goes into working media (i.e the actual impression to a user). There are certainly some areas in which it could be said that marketers are not seeing the true value for which they are paying for prior to the impression, however, creating a programmatic operation is not cheap. In our four question framework we have cited $20m as the minimum spend threshold for an advertiser to be spending in programmatically enabled channels before considering bringing programmatic in-house - this is so the advertiser can make significant savings on their investment to deliver better marketing performance. A minimum performance improvement for undergoing an exercise such as in-housing programmatic should start at 10% - this equates to $2m in savings. This acts as an investment buffer for the upfront cost of recruiting talent and setting up the operation as a brand cannot expect to meet or beat previous goals from day one

8 8 TALENT CONSIDERATIONS There are five key considerations before hiring programmatic talent into your business: Location Are your offices based in a location which will be able to attract hard to find talent? To consider in-housing programmatic today requires a marketing organisation to have a mindset which is aligned with execution and accountability and not a mindset which is reliant on partnerships. Having people within the business who know how to operate and maximise the use of technologies, manage implementational risk and can optimise the performance of media is imperative. Salary & benefits competitiveness Programmatic talent is in short supply and therefore costs are markedly higher than other disciplines it s important to factor this into your existing salary thresholds. Workload When operating with relatively lean execution teams (ie less than 5 members) it s important to understand what the maximum work threshold is and what happens if someone is on annual leave, off ill, or you are inbetween 20% of your workforce leaving and waiting for new members to join. This team can be hired into the organisation, but before a marketer can realistically consider bringing programmatic in-house, the team must be set up. In our experience, the best way to do this is to create a transition plan in conjunction with your incumbent programmatic partners to ensure that onboarding is effective. Culture Will the programmatic talent be working within a fun/dynamic environment where they will not encounter office politics? Retention Once you have made the investment into the programmatic team, you need to have a plan to retain them as churn in execution teams is incredibly difficult to manage and opens you up to significant risk.

9 MEASUREMENT VIABILITY 9 Understanding the effectiveness of investment that is being made by any in-house team within a marketing organisation is critical due to the heightened level of accountability the organisation has brought upon itself. Working closely with measurement related stakeholders is a must from day one of an in-housing project as they will likely be responsible for setting your performance and commercial goals on an ongoing basis. Programmatic has the ability to optimise towards multiple data points to drive towards a single goal but programmatic needs to know what the goal is - having this feedback on a time-delay will only hinder the success of the project. Advertisers need to ensure they have clear KPI s for the performance of their programmatic activity. Measurement should already be in-housed or should have a very robust framework in place via partnerships before considering in-housing programmatic. The measurement of brand safety should also be considered to ensure that every advertiser has a strong setup in place to avoid non-human traffic and poor ad placements.

10 10 Within the programmatic cost breakdown (1) it is estimated that 35% of a marketers budget resides in technology. TECHNOLOGY VIABILITY The need to integrate these programmatic technologies within existing infrastructure and ways of working is crucial to the success of an in-housing project. Having technologies which sit disparately and therefore have inconsistent data (e.g a difference in cost counting) will lead to major operational burdens. Prior to onboarding of programmatic technology it is important to have consistency in foundational marketing technologies such as CRM, Adserver, Measurement (analytics/attribution) & Data Visualisation. Having consistent foundations globally cannot be understated as these foundations provide the basis of successful programmatic activation. 1 WFA cost breakdown

11 SOME FURTHER THOUGHTS 11 On page 3 where we provided a graph on how advertisers should plot their in-house programmatic capabilities we believed that operational resource and contractual relationships are the two biggest hurdles an advertiser has to overcome to consider being 100% in-house, we appreciate that things such as planning (media and creative) and analytics are also important but they can be built on top of the technology and commercial foundations and can (and often should) be outsourced. On page 6 where we consider the talent requirements, it s important that advertisers are very realistic with themselves on their ability to attract and retain operational talent. Traditionally this sits in major cities of countries, so brands could also create operational hubs which may be detached from the main headquarters. Organisational structure is generally a key consideration for how marketing becomes integrated into overall business and product/service making decisions. The 2014 WFA programmatic breakdown report referenced on page 8 is an extreme version of the value chain and is generic, many brands will have different fee setups in place and should carry out their own due diligence in the commercial effectiveness stage.

12 SUMMARY 12 Our document aims to highlight that the decision to in-house programmatic should not solely be a commercial transparency driven decision - the opportunities to create effective consumer experiences with brands and therefore better business performance can be significantly increased by in-housing programmatic when done correctly. In practical terms, advertisers need to decide whether they see programmatic as a strategic initiative for their marketing ambitions or not. Once they have this they need to map out an in-housing project plan across the four pillars we identified; investment, talent, measurement and technology. Our recommended next action for advertisers who believe they can meet the thresholds we have set within this document is to build out a commercial feasibility study. This will act as your base for setting expectations within your business and will help you land upon on the most suitable operating model. Good luck!

13 THANK YOU CONTACT US - HELLO@THEPROGRAMMATICADVISORY.COM