Why Ad Tech Needs to Shift Toward a Managed-Service Model

Well, that escalated quickly.

As calls for transparency in digital advertising continue 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, has 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.

But a funny thing happened on the way to the future: 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 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 $20 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.

Access to Talent

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. Industry execs have complained that if a brand is located in Dallas or Atlanta, it will probably only be able to find three to five people in each city who can do programmatic at a leadership level. It doesn’t help that so few universities are teaching programmatic. Managed service addresses the squeeze for talent.

In-House v. 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.

Experimentation

If a marketer is considering a new technology but isn’t certain of the precise advantage it provides to her 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 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 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. Remember, all modern digital advertising tools are built for a SaaS world. That 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.

Alexandra Theriault has over a decade of experience in the internet business and information services industries, defining and executing value driven initiatives with publishers, technology providers, agencies and brands. As the VP of Client Success at Lotame, Alex’s primary objective is overseeing customer-facing strategy, building and supporting programs primarily focused on increasing renewal rates, upsells and reduction in churn. Prior to joining Lotame, Alex was with IndustryBrains, a leader in monetizing vertical and brand-name websites through contextual advertising solutions, a subsidiary of Marchex.

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