Fifty shades of media buying: Why in-housing isn’t a black and white decision

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‘Taking back control’ has become a bit of a buzz-phrase over the last few years. Though, not necessarily in relation to Brexit. The number of brands bringing their digital media buying in-house—taking back control—has rocketed.

Myriad motivations, from future-proofing to improving efficiencies are quoted as basis for the trend. But the harbinger was the publication of the US Association of National Advertisers (ANA) Media Transparency Study in 2016, which, as many will recall, highlighted a ‘fundamental disconnect’ regarding the basic nature of the advertiser-agency relationship.

The practice of keeping rebates and cash kickbacks from media buying was lambasted as ‘pervasive.’ Holding companies with their own media agencies operated a sort of revolving door, whereby often a client spend was directed to media and technology suppliers, where the agency could make additional revenue, regardless of whether it was in the client’s best interests. So concerning were some of the practices highlighted, it has been reported that the FBI are investigating some outfits.

To top off transparency issues came a tornado of ad fraud and brand safety concerns. Combined with slashed budgets (following very public questions over the effectiveness of digital advertising) we arrived at this perfect storm: an industry in disregard, with trust issues that required addressing.   

If every action has an opposite or equal reaction, then the glut of firms ‘in-housing’ their digital media buying is just that. According to Pivotal Research, a US-based equity research outfit, last year 15 of the top 200 advertisers Stateside took media-buying away from external agencies.

Back on these shores, according to a study by the World Federation of Advertisers, 90 per cent of advertisers are reviewing how they buy programmatic ads. We’ve just this week learned that GlaxoSmithKline looking to join the ranks of the in-housers. Who will be next?

Fear and Loathing in Adland

Working with the ANA, our team at Ebiquity/Firm Decisions compiled a wide-ranging set of recommendations, with transparency and accountability at their core. It was timely, and though waves have been made to clear up the space—to roving success—memories aren’t so short.

Subsequently, media buyers are polling somewhere between politicians and estate agents. It’s Fear and Loathing in Adland.

With media agencies cause célèbre, it is only natural that the perceived distrust is being leveraged as a key strategic growth opportunity for many companies, especially management consultancies. In nearly every marketing specialism, the consultancies have made themselves felt, buying up smaller independent agencies, from creative to website development, and are moving into buying media themselves.

One of the ANA recommendations was to substantially expand audit rights if necessary, which many have. After an advertiser has had an auditor in to review its media spend, if it leads to a strategic review, the advice might be to take media in-house. “And by the way, we can give you people help you run the service for you”.

Ask who benefits most from recommending in-housing services, and the answer is often in the question. It is rather convenient for MCs to offer you their shiny new media buying agency.

Plainly, there are many now leveraging transparency issues to sell a product or service, which is just business. But herein an irony lies: in retaliation to advertiser’s money not being spent in their best interests, the response has been to offer services that, we believe, may not also necessarily be in advertiser’s best interests.

There are questions that every CMO should first consider carefully: which elements they might bring in-house, why they want to do so, and what consequences such a decision might have? They also need to understand that the decision to in-house or outsource—to build or to buy—is not a black and white decision, and that there are many shades of grey in between. I shall explain why.

Fifty shades of media spend

Parking for a minute the virtues and intentions of management consultancies, in-housing itself poses just as many risks to a client’s marketing activity as the risks around media transparency with existing agencies.

It is important to first establish what is meant by the term, as it has been somewhat misappropriated. The service offered by many of the consultancies, it is imperative to say, is not in-housing. By definition, ‘in-housing,’ in this context, is to hire your own team to oversee functions of your digital media spend, either in part, or totality.

The first thing to understand is your motivations. A brand shouldn’t in-house simply because it doesn’t trust its agency—that’s like being nervous about being burgled, so instead of installing a burglar alarm, moving your entire house. It may have the desired effect, but there are many easier and cheaper ways of stopping your house being burgled.

We see parallels here between the promotions of digital at the expense of traditional media witnessed in the last decade. Traditional media in many cases is more effective for brands, but for fear of being behind the curve, money is poured into digital without its effectiveness being properly measured.

Likewise, it may make more sense to outsource, but it is vogue to move in-house, so many advertisers are planning to do so. I am partaking in what Gideon Spanier, head of global media at industry bible Campaign, described last week as “defending legacy business models”.

He posits that in-housing is “exhilarating for anyone who recognises this is a smarter, more agile, more connected way of working.” But he’s wrong, rather than being a more connected way of working, in-housing risks creating silos and diluting your core message through further fragmentation.

It is key to remember that digital is only one part of an integrated marketing strategy. In the delivery of media campaigns, potential or existing customers are exposed to advertising across numerous media channels – be it TV, press, radio, outdoor, or online. Ideally, agencies plan the execution of media activity to ensure that the timing and coordination of messaging to customers drives maximum impact.

By having all digital channels planned and bought through a centralised approach, advertisers are much better able to re-allocate budgets from under-performing channels to better-performing ones, manage reach and frequency much more efficiently, and coordinate campaign timings and delivery more efficiently. This is not to say that the same cannot be achieved with in-housing, but it is operationally more challenging.

The art of the deal

Another argument is that in-housing will lead to striking better deals, because agencies are untrustworthy. Gideon may feel like I’m picking on him here, but that is not my intention: many of the issues he raises in his piece last week compound the noise surrounding the subject. “With a lot of digital media investment flowing to only a few platforms such as Google, Facebook and, increasingly, Amazon,” he says, “it is easier for brands to strike direct deals with them”.

This is bit of a myth. Most large firms already have in place the ability to strikes deals with the likes of Amazon, Facebook and Google. The terms of that deal are then operated by media agencies. But that’s just a handful of deals, which we recommend.

Consider the scale of what you will be taking on if you in-house: Is your finance team sufficiently ready and willing, skilled and agile, to handle hundreds of publisher relationships? Will they be able to achieve anywhere near the price points negotiated at agency group rates? Very often, the answer is a resounding ‘no’.

And that’s without considering the talent required, and requisite exercise in HR. Programmatic advertising, for example, requires a complex technological infrastructure, which needs the right talent, investment and skills behind it to make it work. Can your firm really find the talent to replicate the expertise of a dedicated third party? Will you be able to evaluate the performance of internal teams as rigorously as you would a programmatic agency?

If ‘taking back control’ without first understanding the complexities that brings sounds all-to-familiar—be it striking deals or access to talent—then perhaps err on the side of caution. You don’t need to move in-house to be in control.

In-housing any aspect of your media technology and services should not be entered into lightly. Because of the myriad considerations and complexities of in-housing some or all of your media supply chain, always ask yourself if there is an alternative solution. Also, beware any vendor or consultant who has a vested interest in you pursuing in-housing. We are definitely not saying “don’t do it”, but we certainly are saying “look and plan carefully before you leap” in the rush to move from buy to build.

Tim Hussain, Practice Principal, Ebiquity Tech
Image Credit: Jacob Lund / Shutterstock