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Ad tech needs to shift towards a managed service model

Digital ad spend in APAC is also expected to reach 48 per cent by 2020. However, marketers are still struggling with digital transparency and effectiveness. As calls for transparency, collaboration and trust in digital advertising continues to grow louder, many believe the industry is moving toward a self-service model. For instance, Richard Joyce, senior analyst of programmatic media for Forrester, believes that rise of self-service is the future of ad tech. He argues that self-service not only offers marketers’ transparency and control, but helps them build a storehouse of knowledge for their future digital advertising initiatives.

But soon, many marketers and publishers have found that there’s a steep learning curve involved with moving all operations in house. In October, for instance, telecom Vodafone backtracked on a previously stated plan to bring most of its digital media buying in house. And a 2018 IAB report found that full in-housing is in the minority – only 18 per cent of marketers claimed to in-house all programmatic buying functions.

While comprehensive in-housing might be sensible for certain kinds of marketers, for most, going completely in house is too extreme, given the time, commitment and resources involved. 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 grappling to decide 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, brands must be spending at least $20 million programmatically a year even before they consider taking programmatic in-house. In addition, in-housing transition requires at least one-year commitment to the personnel brought aboard, a process which includes talent recruitment, partner contracts, staff training and coordination, among other factors.

Access to Talent – Finding Programmatic Experts is a Challenge
The programmatic talent pool is small. Workers who are well-versed in the technology demand high salaries and are often uninterested in living outside of top urban centers. Hence, location poses as a serious hurdle in finding local talent. Often, industry execs have echoed that companies struggle to find ad tech talent that truly understands programmatic. Also, it doesn’t help that so few universities are teaching programmatic. Managed service addresses 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 marketers are considering a new technology but isn’t certain of the precise advantage the technology would bring to their business, or how to correctly apply that technology, using a managed service stands clearly beneficial here. 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 to this type of approach include site analytics, DMP, CDP, and multi-channel optimization 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 APAC 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 internal cost, worried you don’t have the right resources, or just want exposure to a new technology before taking the risk to operationalize it, you can still address concerns about the lack of transparency from agencies with a hybrid model. 47 per cent of brands have partially moved programmatic functions in house which means that they are outsourcing tasks to media agencies and/or DSP partners.

All modern digital advertising tools are built for a SaaS world. This means if your experiment is a success, you can move to operationalize 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

Fred Mathoz

Fred Marthoz is the Managing Director, South East Asia at Lotame.