• by Jeff Kaldahl , July 8, 2014

It’s been predicted for years, and now it’s happening: Major brands are turning away from agencies and building in-house advertising teams. Even Apple is now getting in on the in-house action. And don’t think programmatic buying is being left out. The Wall Street Journal recently devoted a full article to the rise of programmatic buying in-house. The article highlighted the growing concerns brands have about transparency at agencies. But if transparency is a big part of the story, it’s not the full story. When I talk to brand marketers about the pros and cons of taking programmatic buying in-house, this is what I hear:

Pros:

Avoiding double fees: In an era of tighter budgets, no one wants to spend more than is absolutely necessary. But when brands do their buying through agencies, they’re paying the agency's fee and the ad tech vendor's fee. Avoiding double fees can lead to big savings in the long run.

Controlling first-party and CRM data: Brands today need to protect their data. It’s that simple. They learn valuable lessons from the data they gather from their campaigns, and they can’t afford for those lessons to fall into the hands of their competitors. Equally important, brands have to be as careful as possible with consumer data. The more control they have over their own data, the better they can protect their customers.

Greater efficiency: Let’s face it: Too many cooks spoil the broth. Whens brands build in-house teams, they can build relationships directly with the people who run and support their programs. That means better communication and greater trust. When brands have to work through an agency, it can sometimes be a huge headache just to get the proper pixels placed on a site.

Stronger alignment with unique goals: Agency structures are generic and that often won't suit a brand’s unique needs. At the tactical level, having an in-house team provides a more hands-on approach to campaign optimization.

More support from ad-tech vendors: More often than not, ad-tech vendors are specialists who spend a lot of time teaching agencies about the latest programmatic trends and tricks. When brand marketers work with ad-tech vendors, they have the opportunity to learn the secrets of the trade directly from the experts rather than sitting back and hoping the wisdom gets passed along.

Cons:

It takes a lot of resources: There’s a big difference between a company like Apple going in-house at scale — essentially creating an agency structure — and a small company going in-house. At a smaller company, there might be only one creative working with one person for SEM, one for social, and one for media. Such a small group is likely to stagnate quickly, and the brand is likely to start missing its agency.

Lack of creative talent and alignment: Typically brand marketers are not the ones coming up with the “big idea” or supplying the creative push. And even if brands do have the creative talent, there’s still the risk of creative misalignment across all campaigns. Say, for example, that a brand is working directly with a vendor to run programmatic but working with an agency to run site and TV buys. The brand in this scenario will have to be particularly careful to make sure that creatives are aligned across all campaigns and tell the same story.

Looking Ahead

As you can see from the above, the pros are outnumbering the cons right now -- which perhaps explains why more and more brands are working directly with programmatic vendors. Agencies, to be sure, will continue to play a valuable role in digital advertising for a long time to come. But, based on what I’m hearing, agencies are going to have to find new ways to add value if they expect to have a future in programmatic buying.