In-Housing and Programmatic: Finding The Right Operating Model

The concept of in-housing is a polarizing one. Traditional operating models are changing, but the rush to bring different processes “in-house” doesn’t make sense for every step of the media-buying process. Still, you’ll undoubtedly have heard brands taking more ownership over processes typically divvied up across different partners is the flavor of the week. I recently spoke to Parker Noren, VP and marketing strategy consultant at MediaMath, to discuss the programmatic company’s recent whitepaper on in-housing.

So, what is in-housing?

“That’s one of those questions that should have a really short answer, but we haven’t found it yet,” Noren said. He added: “There isn’t really a singular definition. It means different things to different people in the ecosystem.” Broadly speaking, in-housing refers to the process of brands becoming increasingly in control of their marketing, as opposed to outsourcing. 

Noren stressed that it doesn’t have to be a binary choice for marketers between the traditional ad agency and outsourcing model, and everything is done fully in-house. To that end, the right model of balancing duties in-house versus outsourcing varies across companies and industries. But before all of that let’s consider … 

Why would marketers want to in-house in the first place?

Who wants more work? Believe it or not, marketers’ jobs can potentially be made easier by controlling activation from ideation, to execution. In-housing allows them to control continuity across channels, have a more direct relationship with customers, and in some cases, take ownership of their own customer data. Overseeing marketing campaign processes also eliminates any growing pains felt between brands and agencies as the ecosystem continues to change.

But the reality of the in-housing trend is much more about finding a balance than anything else, Noren explained. 

“If you’re saying, OK, I, as a brand, feel that I need to evolve how I operate my media, and you’re telling me my only choice is to go to quote-unquote ‘full in-housing,’ that feels indiscriminate and somewhat disruptive. Right? There’s, from existing relationships, a lot of value that’s reaped from those external partners in an advisory role in actual day-to-day activation.”

What is driving talk of in-housing?

In 2017, 35 percent of marketers said they were expanding in-house capabilities, in comparison to only 14 percent in 2016 (according to an Association of National Advertisers (ANA) study). Noren says the “trend” has been building to this point over the last five-to-ten years, and is partly connected to the perception of a “disconnect” between agencies and brands — not necessarily an actual disconnect.

“We work with agencies across the spectrum … in large degree, their best interests are the client’s best interests,” he said. “They’re really acting as their agent.” He added: “There may be a few spoiled apples in the bunch, but in large degree, they’re all good eating.”

The whitepaper also cites two other driving factors: automation, and strategic alignment. Naturally, automation has removed the need for certain day-to-day tasks, which, Noren says, has “allowed for is more comfort on the advertiser side.” Entire processes — some of which used to be outsourced — are now left to the machines. Additionally, brands now have the wherewithal to do huge amounts of primary research, but often struggle to translate that to “tactical decisions” when executing campaigns. Getting closer to the execution helps close that gap.

“By being closer to actual execution, the brand’s strategy — informed by its research and consumer insights — can more directly play through to decisioning,” Noren said. 

How can brands decide what operating model they should be moving toward? 

Knowing what your operating model should be as the landscape continues to shift is challenging — there are multiple moving targets at play. Noren said that the crux of the challenge is making sure that the brand and its partners are comfortable with the nature and scope of their relationship.

“That’s something that fundamentally needs to be fixed and fixed quick, because otherwise you end up with a relationship that can never be as fruitful for driving brand growth, because there’s underlying concerns that inhibit them from having a good real working relationship,” he explained.

He also urged brands to invest in learning about what programmatic can do for them.

“Your consumer insights team, your brand management team, your product developers should start to have an understanding just as they do of TV and linear creative,” Noren said. “Those things — that knowledge — should extend to digital and programmatic so that we can develop a common currency that exists within brands for how we then translate the work that every team does in how things are communicated and targeted in market.”’

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