The Real Costs of In-House Programmatic Buying

Programmatic Buying
David Wall, Flickr

According to eMarketer, between 2011 and 2017, programmatic advertising is expected to grow from less than $5 billion worldwide to more than $32 billion. In case you’re not familiar with programmatic (also known as programmatic advertising), it is the process of selling and buying digital advertising using automated systems. It can be used to automate transactions including real-time buying, the workflow, or both.

“The case for workflow automation is quite easy to understand. Automation creates efficiency, which lowers costs and improves outcomes. No longer do we have to key in orders manually, email advertising creatives back and forth, compare impressions and discrepancy calculations using spreadsheets, or try to figure out after the fact who served the risqué ad. All of this will have workflow around it and increasing levels of automation, as rules, decisions and escalations are encoded into software programs,” says Rajeev Goel on recode.net.

“The secret is that the ad being bought is more targeted, more precise and more effective, and that’s why the advertiser is happy to pay more. It’s much easier to figure out which ads are not being delivered effectively (wrong audience, wrong creative, wrong context, etc.) and to stop it; and then to look at the ads that are being delivered effectively, and to do more of that.”

Another reason agencies are increasing their use of programmatic buying is because margins are high, unlike heavily audited traditional TV media buying. According to Lindsay Clay, chief executive of Thinkbox, “Advertisers have conspired with the agencies on this because they have pushed the agencies so hard on margins, so I’m not surprised everybody’s moving into areas where you can make more money.”

The switch to programmatic has left some companies considering whether they should implement it in-house. However, before making this decision, there are certain factors you must consider.

Difficult Questions Must Be Answered

Before you consider doing programmatic buying in-house, you must answer the following questions:How much of the programmatic buying process are you looking to manage in-house? Are you prepared to maintain your top-level complex partner deals in-house? Answering these questions will define the scope of your implementation, which will make a difference in the costs and time to implement.

It Takes Time to Get it Right

Getting in-house programmatic buying right takes time. In order to set up for programmatic buying, there is software that must be purchased and implemented. While this is occurring, employees must be trained on how to use the new software. New business processes must be put in place for communication between traders and the rest of the company.

“Hiring talented people and providing tools will have limited value unless you undergo the training rigor that is required to learn complex toolsets and understand market dynamics. Training should span advertising (search, display, social), data sources, the supply stream (ad sizes, user behavior), technical implementation (pixels and ad serving) and the system you select to build, target and optimize ads,”says Marc Grabowski on AdExchanger.com.

Risks

There are risks associated with programmatic buying in-house that you don’t have when dealing with an external team of experienced professionals. The software makes it very easy to waste money with “the click of a button”. Doing programmatic buying in-house increases the risk that mistakes will be made. Although your employees will learn through months or even years of trial and error, this process can be very expensive. You have to know budgets, tactics, how to test creatives, and a lot more in order to be successful. Extensive training is required in order to minimize this risk.

While it is possible to develop the training regimen needed to accomplish doing programmatic buying in-house, the initial costs will be high. By using the team of professionals at Katana, you can have elite programmatic solutions, momentum trading, and segmented campaign blueprints for a fraction of the costs.