Why AdTech needs to shift to a managed service model
Chris Hogg leads European operations at Lotame - a data solutions company that helps publishers, marketers and agencies grow.
With more than 14 years of experience in digital ad technology, he's a qualified voice in the field. You can find out what he gets up to in his working week here.
Here, he talks further on why the AdTech model needs to change...
As calls for transparency in digital advertising continue to grow louder globally, many believe the industry is moving toward a self-service model. For instance, Richard Joyce, senior analyst of programmatic media for Forrester, said that self-service is the future of ad tech. Joyce argues that self-service not only offers marketers transparency, but can also provide more control and help them build a storehouse of knowledge for their future digital advertising outreach efforts.
However, many marketers and publishers have found that there’s a steep learning curve involved with moving all operations in house. In October, for instance, UK-based telecom Vodafone backtracked on a previously-stated plan to bring most of its digital media buying in house - a 2018 IAB report found just 18% of marketers had brought all of their buying in house.
While comprehensive in-housing might be sensible for certain kinds of marketers, most are finding that going completely in-house is too extreme. Instead, they are opting for a managed-service relationship. With this model, brands and publishers can get the transparency stimulating the in-house trend with the help of a partner who can handle execution and the ins-and-outs of emerging advertising technology.
For those struggling to determine the best model for media-buying these days, here’s how the managed-service model can address the issues that are driving the industry to reconsider an all-in-house approach.
In-housing is expensive
One reason most marketers are avoiding completely in-housing media strategy is that it’s too expensive. By some estimates, taking media-buying in-house only makes sense if a brand is spending at least €17.6 million a year. In addition, in-housing means at least a one-year commitment to the personnel brought aboard, a process which includes talent recruitment, partner contracts, staff training and coordination, among other factors.
Speaking of recruitment, the programmatic talent pool is small. Workers who are well-versed in the technology and have these new skills demand high salaries and need to be sourced. Managed service can address the squeeze for talent.
In-House vs. Agency is a false binary
In-housing versus managed services has been presented as a binary choice. But brands that are fed up with a lack of transparency have other options besides bringing all of their buying in-house. For instance, a brand can now build its own programmatic stack for targeting but can let its agency handle planning and execution. This is the approach that Procter & Gamble takes.
If a marketer is considering a new technology but isn’t certain of the precise advantage it provides to the business, or how to correctly apply that technology, using a managed service provides clear benefits. Managed service allows a marketer to focus on the value that new technology can create, rather than operational burdens. Examples of technologies that are a fit for this type of approach include site analytics, DMP, CDP, and multi-channel optimisation tools.
The hybrid model
The expense of in-housing and the programmatic talent shortage are long-term issues. Currently, in-housing runs contrary to the general trend of reliance on outsourcing and on-demand technologies (like SaaS) that allow businesses to focus on their core competencies instead of wasting resources on peripheral concerns.
That’s why, although it might seem like the EMEA market is going to a self-service model, for many marketers, it’s not the most practical or efficient option.
If you’re struggling with the internal cost, worried you don’t have the right resources, or just want exposure to a new technology before taking the risk to operationalise it, you can still address concerns about the lack of transparency from agencies with a hybrid model. Remember, all modern digital advertising tools are built for a SaaS world. That means if your experiment is a success, you can move to operationalise new methods or technology after it’s been validated.
A hybrid model of in-housing with a managed service to boost your execution and success is the ideal answer.