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Throughout programmatic advertising history, brands have often entrusted its execution to agencies and trading desks. But today, in a world of high consumer expectations and constantly shifting market dynamics, many brands are searching for an alternative to the traditional brand-agency model as they look to gain greater transparency into their media buys, more holistic control over their data, and greater assurance of compliance with privacy regulations.
The result: programmatic in-housing.
Numerous heavy hitters have already brought elements of their programmatic operations in-house, including Marriott, Colgate-Palmolive, Procter & Gamble, Coca-Cola, Bayer, Wayfair, American Express, Unilever, Anheuser-Busch, Netflix, Target, Deutsche Telekom, and Ally Financial. Now, as those groundbreaking programs mature and their outcomes come into view, more brand advertising leaders are peering over with interest and beginning to question whether they, too, should take some—or total—control of their own programmatic business.
With many different levels of programmatic in-housing available, as well as a variety of potential benefits and challenges, leaders must carefully consider which—if any—in-housing option is best for their brand and team. Whether opting for full control, a hybrid approach, or a path to self-service, choosing the right in-housing model can significantly impact both campaign performance and operational efficiency.
The first adopters of in-house programmatic media buying were mostly digital natives like Netflix and Target—brands boasting rich, voluminous first-party data that gave them a head start on the process. Over time, though, the types of companies in-housing have become more diversified. And, they have done so with varying degrees of success.
Those who tried and failed often did so because they underestimated the logistical hurdles involved and became too fixated on the stereotype that in-housing is an all-or-nothing play—just look at Vodafone or Prudential. But this idea of agency versus in-house programmatic as a dichotomy is outdated, as it doesn’t suit the needs of modern brands. As marketing leaders learn more about the intricacies behind this digital transformation, a whole range of in-house programmatic manifestations are emerging, with brands and agencies breaking new ground and creating new operational frameworks as their relationships evolve. Indeed, in-housing programmatic is far from a death knell for agencies—brands still lean heavily on their external partners, and agency investments still command more than 20% of total marketing budgets. Understanding market logistics and maximizing technology-driven optimization opportunities requires as much critical insight as possible, and agencies remain ideally positioned to provide that guidance.
When it comes to programmatic in-housing, one thing is clear: Where we were five years ago looks very different from today, and where we are today will look very different five years from now.
While it is difficult to neatly classify the numerous variations of in-housing—especially considering all the factors involved—here are four of the most common arrangements:
This is the quintessential in-housing set-up, where an adtech stack sits within a brand organization in tandem with media strategy, ad operations, data management, and campaign stewardship. An in-house operation that looks like this is still relatively uncommon, given the major commitment of time, resources, and internal talent marketing organizations need to launch, maintain, and refine it.
However, despite the complexities involved, the popularity of programmatic in-housing is rising, and brands are building relationships with the technology platforms and the talent they need for in-housing to succeed. Case in point: 66% of brands say they have contracts with technology providers like DSPs or verification partners, and two-thirds also say they have “hands on keyboards” doing the actual work.
For brands going down this route, the classic approach involves forming an internal agency-style trading desk and equipping them with a demand side platform (DSP). Going all-in can be a monumental task, but with the right preparation, planning, and implementation, the returns are significant. Pharmaceuticals giant Bayer, which first began developing their in-housing operations back in 2017, was reportedly able to reduce its programmatic buying costs by over $10 million in just the first six weeks. The company has also pointed to a number of additional in-housing related benefits, including ownership of their tech stacks, data, and dashboards.
Bayer’s success presents a microcosm of the upsides that come from in-housing programmatic. Transparency is a major one: With data privacy at the front and center of public consciousness, it is paramount that brands know exactly what their advertising is doing.
Despite progress over the last few years, many agencies still fall short on providing real visibility into the digital ad buying process. This lack of transparency, combined with increased control and potential cost savings, drives many brand leaders to pursue in-housing. Indeed, gaining access to unfiltered campaign performance data empowers brands to do a host of valuable things, including:
The fact that Bayer was able to save $10+ million almost immediately after in-housing its programmatic is more the exception than the rule. Brands often see cost benefits over time as they save on agency fees, including fixed rates, platform costs, and media expenses. Internal programmatic teams can concentrate solely on maximizing profitability for their brand. In contrast, agency partners balance this goal with their own revenue needs and margin requirements. Going all-in on in-housing removes these additional layers, potentially streamlining the path to increased profitability.
Then there is the matter of cost efficiencies through better campaign execution. The switch in-house ultimately enables brands to invest in—and nurture—talent within their marketing organization. While outsourced staffing solutions can provide some great results, they may not be able to optimize the consumer journey with the same granularity as an in-house staffer who knows the brand through and through.
Now, there may be many upsides to in-housing, but brand leaders should not underestimate the organizational, technological, and cultural challenges involved in this digital transformation.
For starters, programmatic in-housing takes time. Ideally, the transition should be a well-researched, deliberate journey with calculated investment in the right resources and tech over a period of many months, if not years. From the outset, those leading the change need to ensure they involve a wide range of internal stakeholders from all corners of their organization, including finance, legal, product, and IT. All these teams will have either a direct or indirect influence on the program’s success, so it is important to listen to their input on the process and get their buy-in before proceeding. What are the security implications, for example, from an IT perspective? How much budget is available for the required tools? How are privacy regulations going to be respected? What are the data challenges from a CRM standpoint? A multitude of questions must be answered, so the more support earned from across the organization, the better.
In sum, programmatic in-housing is not something you can just do on a whim, and it is critical to set the expectation internally that transformational results are unlikely to arrive immediately. Brands accustomed to focusing on short-to-medium term initiatives and goals must learn to adapt to protracted, longer-term processes and a new way of working if they want to successfully in-house programmatic.
Of course, most marketing leaders are thinking hard about how to wrangle more out of their advertising dollars, and many are concluding that they need outside help and guidance to do so successfully. At the same time, many media agencies are adopting new structures—reorganizing in a way that makes it easier to offer on-demand services and step into a more advisory role for clients that seek to in-house some of their programmatic budgets. It is a development that makes sense for both parties: Agencies have extensive experience in what works and what doesn’t in the programmatic sphere—not to mention the tools necessary for executing on programmatic media buys—and clients need to tap into those resources as they bring some of that operational activity inside their own walls.
This, in essence, is what the hybrid in-housing model is all about: An in-house marketing team tees up the overarching strategy before consulting with an agency on how to deliver it in the market. Sometimes, this will lead to the agency assuming the day-to-day responsibilities of implementing the plan and pulling the levers, and other times it will lead to the advertiser doing the work with their own platform under the agency’s direction.
The latter scenario is the one that more brands are pursuing, as it ultimately merges many of the best aspects of both in-housing and outsourcing. With hybrid in-housing, brands can:
An Association of National Advertisers study frames the hybrid in-housing trend in numerical terms, finding that, in 2023, only 32% of marketers had in-house programmatic capabilities, and just 17% of the remaining respondents were considering adding those capabilities within the next year. This highlights just how important agencies remain to brands. Programmatic advertising can be a complex venture, and there are still many marketing organizations that struggle to identify the right systems to help them better engage their audiences. The hybrid option alleviates that pressure and empowers brands to take whatever baby steps they want.
Option number three: fully outsourcing, a route that many brands still prefer despite the myriad benefits that in-housing offers. It represents a great option for those who don’t have the resources to build an internal programmatic team and all the costs that come with it—think upfront licensing fees, salaries, training, etc.
From a brand perspective, the main drawbacks to contracting out all aspects of programmatic advertising are the lack of control they will enjoy over their consumer data and the limited transparency they will get into media performance. To address this, however, some agencies are recalibrating with a dynamic that is helping them win more programmatic business: the holding company model solution. Indeed, a growing number of agency pitches today feature purpose-built services supported by their holding company’s dedicated data and analytics divisions. It is a move designed to negate the potential for brand-agency conflicts, with these specialty customer intelligence orgs brought into the equation to fuel better communications planning and extract deeper insights into the brand’s marketing efficacy. It is a symbol of how some agencies are responding to the moment and the mood of the industry, becoming nimbler and reengineering their capabilities to stay attractive to brands.
One key area where agencies retain an upper hand in the in-housing/outsourcing calculation is talent. Managing and optimizing programmatic media is a complex art, and advertisers considering independence from agencies will need a glut of staff additions to ensure they are doing things right—a programmatic manager, a data analyst, and a DSP operator, to name but a few.
The problem facing brand-side HR departments today is actually filling these positions—the labor market in this field is desperately tight, job titles are evolving, and, to make matters tougher, the available talent often take opportunities at agencies over brands because they can offer better career progression, opportunities to diversify, and ongoing learning. Within the four walls of a brand, those things can be difficult to come by, considering there is only one program to service and (most likely) fewer opportunities to influence overall strategy.
No player in the programmatic space can expect to be successful without the right people doing the bidding, so this talent shortage is a pressing concern for brands, often leaving them with no choice but to look to external partners.
Likely a concept that many marketing leaders may not even be familiar with, the path to self-service model is aimed at brands that desire greater control over specialized programmatic functions but may be kept in check by internal resource limitations.
The premise is simple: Marketing organizations tap dedicated in-housing consultants to onboard new technology at a pace that makes sense for their evolving business. Then, as the client gets more comfortable with each aspect of the programmatic ecosystem, the consultants introduce more capabilities and training modules to nurture in-house teams to the point where they can manage everything independently. This is an option that may suit small- to medium-sized teams who have been wary of in-housing programmatic media buying because they felt it too complex and/or tedious for them to manage alone. But with the proper training and strategists on standby, teams can maintain internal operations with far greater ease.
Here is what a typical path to self-service might look like over six months:
This path to self-service blueprint can ultimately help brand leaders ensure their systems, campaigns, and data consolidation practices are set up effectively from the outset, allowing their teams to mitigate many of the issues that can bring in-housing plans grinding to a halt.
From platforms to people to processes and everything in between, with so many factors to weigh when considering in-housing programmatic ad buying, where does one start? Here are a few considerations for marketing leaders looking into in-housing, whether they’re at the RFP stage or just the “I was thinking about…” step:
1. Evaluate “why” this is important to your organization. Is your organization looking to cut costs? Hit a business objective? Gain more operational control? Identifying your in-housing “why” will allow you to understand your needs, wants, limitations, and what you’re trying to change. It also creates space for a feasibility check and an objective session to help move from problem to solution.
2. Understand the landscape. Nearly a decade ago, in-housing came into vogue thanks to tactics like RTB. However, during the height of the COVID-19 pandemic, long-term contracts and full-time employees became more of a burden as businesses just tried to survive. If you do consider in-housing, it’s important to consider it in context of the larger marketing and economic landscapes to ensure that now is the right time to take the first steps.
3. Review your readiness. When it comes to technology, are you comfortable vetting new options to streamline how you use your existing tech stack? In terms of people, are you well-positioned to add, retain, or replace talent? As far as strategy, how does your first-party data look? How confident are you in making real-time optimizations to live campaigns? Answering these critical questions can uncover your gaps as well as highlight opportunities for process and personnel improvements.
4. Bring in the right stakeholders. As noted earlier, organizations that wish to bring their programmatic adtech stacks in-house—even if an agency might still operate and manage it—should invite HR, IT, CRM specialists, finance, legal, and product to early conversations, as any of these people may have direct or indirect influence on, or use of, the tools at hand.
5. Bite off only what you can chew. Even though it may save money in the long run, in-housing programmatic can be an expensive venture: It takes time, it takes energy, it can be costly, and it can be disruptive to the status quo for many organizations. Taking it on in small chunks can help match a company’s tolerance level for each of those considerations, whether that be in the form of a hybrid model or a path to self-service.
Bringing programmatic media buying in-house is a significant undertaking. The whole operation must be built on a foundation of organized data, deliberate processes, capable tools, and skillful talent. As programmatic’s prominence rises and privacy continues to be at the forefront for consumers and regulators alike, more marketing leaders may want to in-house their programmatic advertising… But, all too often, they don’t know where to begin.
The good news that is a host of options exist, from going all-in, to a hybrid approach where brands and agencies share responsibilities, to full outsourcing, to going down a path to self-service. Overall, in-housing has many benefits, the biggest being the ability to obtain greater transparency into media buys and secure more holistic control over data, not to mention the possibility of significant long-term cost savings. And either way, agencies still have an important role to play in the media buying ecosystem—whether as valued partners or as critical consultants.
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If you’re starting to think about making changes to your organization’s programmatic advertising strategy and are looking for some guidance, our Programmatic Readiness Quiz can help! In just three minutes, you’ll discover whether outsourcing, hybrid, or in-house programmatic ad buying is the best path for achieving your team's goals.