Nancy Hill, President of 4A says it well: “It’s been very clear for quite some time that agencies need to be much more agile and faster to respond, and that’s what real-time marketing has pushed us all toward.” Increased agility is only the tip of the iceberg. Here are 10 reasons why companies are increasingly taking their media buying from external vendors and agencies to in-house talent:
1. Cost Savings on Media
Ad networks and other black box vendors funnel a substantial portion of ad budgets into media markup costs — the profit margins that these middlemen take by charging a premium on top of the cost of the inventory as they resell that inventory back to the end advertiser. According to Boston Consulting Group research, these media markup margins average 40% and can be as extreme as 100% depending on the ad network and vendor.
In-house advertising software that enables direct to publisher media removes these middlemen, leaving more of an advertiser’s budget for actual ad buys.
2. Cost Savings on Services
There’s additional cost savings for companies taking their media buying in-house from an agency or third-party managed services provider: cost savings from the premium charged for these managed services. In our recent eBook Marketing Moneyball: Why In-House Advertising Changes Everything, we outline a back-of-the-envelope cost benefit analysis, where a company spending $2,000,000 annually on digital advertising can save $500,000 by taking their advertising in-house.
This not only unlocks $500,000 in additional budget to be channeled to actual ad buys, but it also means more budget to bid higher to place messaging in front of high value audiences who typically cost more to reach. Even if an additional in-house resource is needed for a company to manage the advertising software in-house, at an estimated $100,000 in annual salary, cost savings still amount to a whopping $400,000.
3. Performance Gains
Rather than shy away from the responsibility of campaign performance, in-house advertisers thrive on diving into the data to own and improve the outcomes. These advertisers are far better positioned than any third party to identify new opportunities and valuable customer learnings from campaigns to improve the performance of future ad campaigns as well as other marketing initiatives. By taking advertising in-house, marketers also benefit from being able to test more, test faster, and scale at will.
Adding to this, in-house advertisers benefit from having total control over how their products are marketed, from ad design and testing to how campaigns are optimized and reported. When in-house teams assume responsibility for everything from creative and budget allocation to monitoring performance and making optimization adjustments, they gain real-time visibility into powerful customer insights that enables them to improve performance.
4. Cross-Channel Insights
Marketing teams that control digital advertising in-house across a variety of media channels further benefit from cross-channel learnings and performance gains. Rather than keeping digital ad budgets siloed with a myriad of third parties, these in-house advertisers can glean insights from one media channel and apply them to another. Mobile is a great example of this as these devices continue their trajectory toward becoming the first screen. Feeding purchase behavior learnings from mobile campaigns into desktop campaigns can bring new levels of relevancy to audiences that wouldn’t otherwise be possible if desktop and mobile budgets were siloed among different external agencies or vendors.
No one understands a company’s customers, products, and industry better than the internal marketing team that lives and breathes these every day through routine touch points like phone calls, emails, meetings and conferences. In-house advertisers have the benefit of deep product and customer knowledge to run high-performing campaigns like no third party ever could.
When it comes to the fast-paced world of mobile in particular, it’s clear that brands place a high value on their own expertise. According to Gartner research, mobile strategy, technology decision-making, and measurement is 80% steered by in-house digital marketing teams, in partnership with IT.
And when it comes to social’s native ad units, responses to ads (in the form of comments, shares, and likes) can get lost in the shuffle if a third party is in control of campaigns. With in-house advertising, marketers are that much closer to customer behavior and feedback.
6. Business Intelligence
The most successful companies today understand the value of gathering data for business intelligence. An IBM C-suite study reveals that 94% of CMOs expect to accelerate the introduction of advanced (predictive) analytics and mobile applications into their business in the next 3-5 years, creating an immense opportunity for in-house marketers to apply industry-specific insights to data and customer behavior. For companies pursuing an IPO or increased valuation, “independent” and “data- oriented” are two very alluring descriptors for investors to latch onto. In-house analytics expertise around the customer purchasing decision journey is a direct reflection of a company’s ability to be self-reliant, know their customers and be reactive to new technology.
Large-scale ad campaigns require a lot of monitoring and adjustment to ensure that supply matches demand. If a marketer runs a planned promotion over the weekend and inventory runs out, two things need to happen: (1) the campaign must be stopped; (2) the campaign must be rerouted to another sale. In the case of working with a third-party agency or vendor, it can take hours to get a response to a request for shutting down a campaign, and much more time spent back and forth with another third party to get new creative and redirect it to a different landing page. In an ANA study, faster turnaround time was cited by 71% of respondents as an advantage of in-house.
According to AudienceScience, 63% of advertisers report either no insight at all or only high-level reports of digital media spend from their agencies. Marketing teams working with third-party agencies or black box vendors with media markup models rarely if ever have insight into true media cost data, let alone any depth of additional performance data or algorithm bidding and optimization decisioning logic. Taking performance marketing in-house means gaining full visibility into media buying, campaign performance, lifetime ROI and bidding decisioning logic. Coupling this with direct-to-publisher media buying offers even more transparency into the true media cost and value budgets are generating.
Adding depth to this transparency is the power of sharable reports and data visualization charts that make communications between marketing, sales and executive staff both possible and necessary. If costs are increasing during a campaign, a CMO or marketing director will want to understand reasons and react accordingly. It’s much easier to quantify the value of digital media spend when the details are two clicks away and easily shareable internally — especially when you don’t have to wait to rely on a third party to surface this information for you.
10. Data Privacy
Marketers are increasingly interested in taking media buying in-house to ensure sensitive data is not made transparent to a third party. Marketers have voiced concerns particularly around sharing proprietary revenue data with external agencies and vendors for fear it will be leaked to competitors or used for the agency’s own gain. With regard to mobile in particular, Mike McGuire, VP of Research at Gartner for Marketing Leaders points out, “Who owns that data for a campaign, how it is maintained once the campaign is over—the issues around data ownership online are extremely difficult when we think about mobile.” By taking media buying in house, companies can ensure their data is kept private.
Want to learn more about in-house advertising? Check out our latest eBook, Marketing Moneyball: Why In-House Advertising Changes Everything.