In-housing has been a hot topic of discussion for the media industry for the last few years. Many major brands such as Vodafone, AB InBev and Clorox have taken elements of their business in-house. This is, on the face of it, a threat to the agency groups, some of whom have responded by creating in-housing consultancies to help their clients take their business in house. What are the advantages of in-housing, and what considerations should advertisers bear in mind?
Over the last two or three years, in-housing has become increasingly common: many of the world’s biggest advertisers now see it as a necessity. In 2018, the ANA found that 78% of its members had in-house agencies, up from 58% in 2013. In-housing takes many different forms, and there is no agreed definition – from producing creative for social media to taking all media buying activity in-house, it covers a full gamut of specialities and expertise.
So why is it happening? For many brands, the answer is straightforward: they want more control. According to Digiday research, that was the reason that 38% of marketers gave for taking activity in house. It gives them more control over their operations, their data, regulatory issues such as GDPR, measurement, performance and, ultimately, their spend. Data is of particular relevance in the in-housing debate: with an increased amount of consumer data available, the potential for improved messaging increases hugely, and it is attractive for brands to have more visibility over how it is used. This is of course especially important for regulatory purposes – with GDPR and now CCPA, controlling what data is used and how messaging shows up is more important than ever. In an age of fake news and privacy and brand safety concerns, control of data is key to a better understanding of the consumer journey and ensuring regulatory adherence.
Another important factor in the in-housing conversation is, of course, the matter of trust. Since the release of the ANA’s K2 report in 2016 which shone a light on agency transparency, trust between advertisers and their agencies has decreased sharply, particularly in more complex and ‘shady’ areas such as programmatic. The reaction for many has been to take at least some of their activity in-house, thereby taking back control and, in the long run, driving cost efficiencies. However, if the main reason for bringing activity in-house is transparency, a cheaper and more straightforward option could be to bring the adtech stack in-house and allow the media agency to work with it.
One of the reasons that in-housing has remained such a big topic of conversation has been the impact that it has had on agencies, particularly the big six holding companies who are losing major pieces of business. WPP, for example, suffered the loss of Walmart’s digital advertising business when the retailer decided to take it in-house, while Vodafone, AB InBev, Clorox, Unilever and American Express have all removed some parts of their activity from their agencies. This has caused some real soul-searching for agencies: it was one of new WPP CEO Mark Read’s key priorities when he took the job in 2018, and several have established in-housing consultancies, such as Dentsu Aegis agency Isobar’s new ‘Accelerate’ offering.
In reality, there will always be a place for agencies – indeed, many argue that it is helping to improve the health of the client-agency relationship. Agencies hold a huge amount of expertise and clout which is invaluable, particularly when it comes to media buying: indeed, Vodafone tried to bring media buying in-house but in April announced a $500m global review for its media planning and buying, suggesting that it hadn’t gone as well as envisaged.
Even for those pieces of business which have been successfully in-housed, successful partnerships are possible and even common. AB InBev, for example, took smaller creative activity, such as social media, in-house, freeing up time for their creative agency partner to focus on the bigger jobs such as the Super Bowl.
In-housing, if done with the right care and attention, can be a great success and drive significant cost efficiencies. However, there are some red flags to watch out for. It can lead a siloed approach that doesn’t enjoy the benefit of a holistic market or strategy view, particularly if communications channels with the agency running other parts of the business aren’t sufficiently open and free-flowing. It can also be very expensive and complex: setting up adtech stacks for programmatic in-housing, for example, and finding and retaining the right talent. Talent retention can be a particular challenge as, without due care, teams can become isolated from the latest innovation and inspiration from other categories. Brands looking at in-housing must interrogate their motives and objective and ensure that they are certain about what they are trying to achieve. They must also stay committed to learning and development in order to ensure teams stay inspired and up to date on the latest developments.
ECI Media Management can help our clients navigate the in-housing process and ensure that they are fully aware of the implications and important considerations. Please feel free to contact us to discuss how we can support you, and look at our top 10 considerations for taking your media buying in-house.
It emerged a couple of weeks ago that ad tech company Ad/Fin has folded. It launched in 2012 as a tool to benchmark pricing data in programmatic media and made a name for itself by partnering with the ANA to shine a light on non-transparent practices in the digital advertising industry. It struggled to generate a sustainable business model, reliant as it was on the data of the very agencies whom it was trying to expose, but was ultimately a victim of its own success: the advertising industry has of late started to clean itself up, rendering Ad/Fin’s offering obsolete.
Since the emergence of the programmatic market, worth $60 billion in the US alone, market dynamics have often been awkward. Advertisers, agencies and ad tech providers have been vociferous in blaming one another for the issues – such as poor brand safety, fraud and wastage – that arise from a lack of transparency. No one really knew exactly how much money was being spent with each vendor, or how much was given to the publisher. The market was becoming increasingly complex, and it was felt that agencies were taking advantage of this complexity to exploit vendors. The result was a chronic lack of trust, largely of agencies.
Ad/Fin was established to try to address these issues. Its business model was based on auditing the breakdown of advertisers’ programmatic spend to provide an independent, unbiased view of the costs and performance of the market, with advertisers and other partners such as PwC and Accenture purchasing and reselling the technology.
In 2016 the ANA, in partnership with K2, released its seminal report on media transparency, creating waves across the industry with its claims that non-transparent practices were pervasive. The report led to a huge feeling of distrust in the industry, leading to a concerted effort by advertisers to take greater control of their digital advertising budgets. Some larger ones such as Vodafone and P&G announced that they would be taking their digital media buying in house so that they could negotiate their own contracts with DSPs.
Following the release of the K2 report, Ad/Fin teamed up with the ANA in May 2017 to create a study that exposed hidden costs in programmatic buying. The study was the result of analysis of over 16bn impressions from winning DSP bid transaction logs, which amplified conversations about the need to take control of contracts. However, the vast majority – 95% – of the transactions processed for the study were not bought by agency trading desks, despite the fact that they oversaw the majority of programmatic spend at the time. They were the least transparent entities and refused to participate, which they could do because it was they, not the advertisers on whose behalf they were acting, who owned the transaction data.
There has been significant progress since the release of the K2 report in 2016, and Ad/Fin’s subsequent study with the ANA the following year. Standards have advanced: the ANA updated its guidelines in 2018 so that they were better aligned with the IAB’s definition of programmatic advertising, while six major ad exchanges signed a letter from the Trustworthy Accountability Group (TAG), vowing to make programmatic buying and selling more efficient, transparent and fair. The industry itself has also started to come together to clean up transparency and safety, insisting on more third-party accreditation and transparent contracts, and have started shifting budgets to more reputable publishers, using contractual obligations to ensure that ads appear as promised. There is also more emphasis on verified, viewable delivery in brand-safe environments – many prominent brands have been burned by brand safety scandals. Marketers accept that they need to take some of the responsibility in the creation of more transparency – prominently, P&G’s Chief Brand Officer Marc Prichard laid out his plan in a speech in April for a new supply chain with transparency at its heart.
All these measures fail to address the issue at the heart of the transparency challenge – that too often, programmatic campaigns simply don’t provide value, or can’t prove that they do. As digital media becomes more dominant, a lack of transparency enables productivity issues: ad practices that annoy consumers or violate their data and privacy rights and thereby contribute to ad blocking, and ads appearing alongside unacceptable content. In a survey of 5,000 marketers across 16 markets, 71% agreed that over the last five years it had become more difficult to measure the effectiveness of their digital media investments. In this AdWeek article, Nicholas Bidon points out that ‘marketers need to leave behind the poor proxies for success most often used to measure programmatic campaigns’, as they were designed to understand whether an ad had been delivered, and not whether the ad had delivered against success criteria. It is the effectiveness and the outcomes that really matter for the client – such as sales or purchase intent – that need to be measured. That will by default lead to transparency. We need to focus on the results rather than the technology, the data and even the reach.
There is a lot still to be done to make the digital advertising industry more transparent and to restore trust between the players. Marketers have an important role to play by having a clear sight of the right metrics and working with agencies to put the right motivating factors in place: a focus on rock-bottom pricing is not entirely without blame.
At ECI Media Management we are pioneers in programmatic audit, and can help advertisers to increase the transparency and effectiveness of their programmatic activity. We work analyse and scrutinise our clients’ programmatic activity in great detail to generate concreate action points, which have had proven effects on efficiency, effectiveness and quality. Please do contact us to discover how we could help you drive transparency in your digital advertising.
Back at the beginning of the millennium, the music industry was in a serious state. CDs were in decline as consumers digitised the way they consumed music: but they were doing it for free via Napster and other pirate websites.
And then, in 2001, the industry’s knight in shining armour appeared, in the shape of Steve Jobs. He announced the birth of iTunes at the Macworld Expo, heralding a music revolution. The era of MP3 music was here, and over the next six years Apple would sell more than 100 million units of the iconic iPod with which to listen to those MP3s. Apple was at the pinnacle of its success, having redefined what music ownership looked like: no longer physical records, tapes or CDs, but a world of songs in your pocket.
In the 18 years since its launch, iTunes has become a media behemoth, a one-stop shop for users to consume not just music, but movies and TV and, latterly, podcasts too. But over the last few years, downloading has been eclipsed by a new kind of access: digital streaming.
In 2008, just a year after the launch of the first iPhone and when iTunes was at the height of its powers, a small Swedish start-up called Spotify launched its music streaming service across eight European markets. Its two-tier model – free to the consumer ad-funded, and a premium subscription option – gave users on-demand access to stream millions of tracks. Music streaming was still in its infancy, accounting for just 1% of global music revenues in 2007, and Spotify’s initial growth was good but unremarkable. By 2013, they had 30 million active users and 8 million premium subscribers.
It is the six years since 2013 that have seen a seismic shift in how music is consumed. By March of this year, Spotify’s user base had skyrocketed, with 217 million active users and 100 million premium subscribers around the world, a number which looks set to continue growing. By opening up the streaming market and persuading users to give up ownership of their music, Spotify has arguably redefined the music industry, just as Apple did when it persuaded users to give up physical ownership.
iTunes’ download model was starting to look clunky and old-fashioned. In 2015, Apple launched Apple Music, its streaming service which it hoped would compete with Spotify and other broadcasters with its three distinct components – on-demand streaming, radio and Apple Connect, which allows artists to upload songs, videos and photos for followers. Since then, as streaming has increasingly become the norm, there have been rumours that iTunes would be wound down.
That finally came to pass this week, as Apple announced at its annual Worldwide Developers Conference in San Jose that it would replace iTunes with standalone music, television and podcast apps. This will align Apple’s media strategy across the board: iPhones and iPads already offer separate apps for Music, TV and Podcast, and Mac/Macbook users can expect the same.
However, the move is symbolic as well as practical. As Amy X Wang says in Rolling Stone, “by portioning out its music, television and podcast offerings into three separate platforms, Apple will pointedly draw attention to itself as a multifaceted entertainment services provider, no longer as a hardware company that happens to sell entertainment through one of its many apps” – and that’s increasingly important as iPhone sales have started to slow.
This move towards entertainment services is being seen across the technology and communications sector: we’ve seen the tech giants buy up rights to live sport, while AT&T acquired Time Warner for $85bn and Disney bought most of the 21st Century Fox empire, fending off an offer from Comcast. This trend is of course being driven by changing consumer behaviour as internet connections over 4G and now 5G accelerate – allowing for uninterrupted streaming of music, TV and films. We’re seeing the effects of technology on the media and communications industries, and lines between these sectors will continue to blur. This blurring of boundaries will then pose another issue on how they can all be monitored & assessed both separately and in totality.
Facebook is facing heavy scrutiny from people and governments across the world after a range of transgressions: the Cambridge Analytica scandal, the hiring of a PR firm to attack George Soros, the departure of 10 top executives and the livestreaming of the Christchurch terrorist attack among them. These and other issues have forced Zuckerberg and his senior management team to appear before governmental committees and the press to explain exactly how they are going to change. This was all reflected in Facebook’s share price, which peaked in July 2018 but had plummeted by 40% by the end of the year.
The conclusion? Facebook must focus on real, meaningful evolution in order to ensure a prosperous future – and that’s just what they appear to be doing.
After months of appearing before government committees and journalists around the world, in March this year Mark Zuckerberg seemed to finally kick off the evolution that his organisation so urgently needs. Having rejected demands for increased regulatory oversight of Facebook for years, in an editorial in the Washington Post Zuckerberg called for more cooperation with governments to deal with the problems posed by internet platforms and emergent internet technologies: “By updating the rules for the internet, we can preserve what’s best about it – the freedom for people to express themselves and for entrepreneurs to build new things – while also protecting society from broader harms”.
Zuckerberg argued that there were four areas that would require deeper cooperation between tech companies, governments and regulators: harmful content, election integrity, privacy and data portability. Measures he suggested included the creation of an independent body to review Facebook’s content moderation decisions and the formation of a set of standardised rules for harmful content; regulation for common standards for verifying political actors; a focus on creating laws that address advertising for divisive political issues; and GDPR-type regulations across the world. Nick Clegg, the head of Facebook’s global affairs and communications team, spoke about how “the way that the rules are drawn – or not drawn – will be quite different to how they are drawn in ten years’ time… and I think big tech companies have a choice: either they play ball and they try to play a responsible role in that debate, or they try to duck it all together.”
Facebook hasn’t stopped at promoting cooperation between tech firms and governments: the evolution strategy has also extended to a series of changes, announced in April, that ‘put privacy first’ because ‘the future is private’. These changes include encrypting Messenger messages and fully integrating the Messenger platform with WhatsApp; trialling a ‘private like counts’ feature; and ways of sharing content without a permanent record. Furthermore, the company is rolling out ‘FB5’, an aspirational redesign of the platform that puts the spotlight on what Facebook would like to be – thoughtful, meaningful and calm. The Groups functionality will be central, and there will be an increased focus on Marketplace as well.
The challenge facing those governments and regulators with whom Zuckerberg wants to work to create a new, brighter internet is massive. Siva Vaidhyanthan notes that “regulators are trying to address Facebook as if it’s like companies they have encountered before. But Facebook presents radically new challenges. It is unlike anything else in human history – with the possible exception of Google.” Governments are trying: the UK, for example, proposed a duty of care standard for platforms to ensure they filter harmful content, and the US government is expected to issue a $5bn fine for the violation of a 2011 order preventing the distribution of user data to companies such as Cambridge Analytica. But Vaidhyanthan compares this approach to dealing individual weather events rather than tackling climate change. Others have suggested more radical approaches: Facebook’s co-founder Chris Hughes called for Facebook to be broken up because “Mark’s influence is staggering, far beyond that of anyone else in the private sector or government. He controls three core communications platforms – Facebook. Instagram and WhatsApp – that billions of people use every day… The government must hold Mark accountable.” Meanwhile, US senator and presidential hopeful Elizabeth Warren proposed dramatic antitrust regulations, and a Bloomburg article suggested that, as social media has been proven to be addictive, it should be regulated in the same way as the tobacco, alcohol and gambling industries – and not the communications industry.
The issues that Facebook faces are dramatically different to, and more important than, those faced by any other company, and they require dramatically different solutions. The varied approaches announced by Facebook in recent months are collaborative, radical and positive, and we at ECI Media Management look forward to seeing them come to fruition.
With increased transparency in the Facebook marketplace, response from consumers is likely to be varied. Users, Governments and Corporations alike should clearly understand how their data is being used by Facebook to target Ads. Changes to transparency and the required investment into security, will no doubt impact the firm’s profits. As customers and co-operations learn more about the result of their time and investment into the platform, initially it is likely demand for the Ad space will see a minor drop, before companies become educated on how to utilise on this newfound transparency. At ECI Media Management, we recognise the value and immense scale of Facebook, which will be crucial to monitor as it moves into this new era.