In-house media buying: are platforms the future?

When it comes to media buying, the question for many advertisers is: in-house or agency? If only it were that simple. This logic is too short-sighted. After all, there are various levels of in-house media buying that influence the division of roles between companies and agencies. The crucial point is: What can this distribution of roles look like in the future and who can link agencies, advertisers, and publishers together in a meaningful way?

In this article, we offer a perspective to answer these questions and address a possible distinction between different formats of in-house media buying.

Content

• Technical in-housing

• Hybrid in-housing

• Full in-housing

• Full in-housing: a utopia?

At the first glance, in-house media buying looks like an enticing concept for advertising companies. After all, it promises full control over the company’s data and budgets as well as independence from agencies and other intermediaries. Indeed, 73% of brands have already brought at least some parts of their digital marketing back under their control. But inhousing is not a “one size fits all” approach: There are different models, which vary in suitability depending on the size and focus of the advertising company. How brands organize their media buying and what role an agency plays as a partner in the process depends largely on internal expertise, financial and time resources, and the ad tech setup. First of all, a distinction must be made between the different formats of in-house media buying: technical in-housing, hybrid in-housing, and full in-housing.

Technical in-housing

Technical inhousing is when companies license technical infrastructures themselves, e.g. for media buying and/or full campaign management. For example, they can license ad servers, DSPs, or verification services themselves or set up a Facebook advertising account independently. Companies take control over technical systems and conclude direct contracts with corresponding service providers without using an agency as an intermediary. However, the agency then works operationally in the licensed system & receives appropriate accesses.

The major advantage of technical inhousing is that advertisers can potentially save money, as they do not need a partner for the complex technical processes and can enter into direct negotiations with providers. In addition, their own data infrastructure can be connected directly based on their resources. This breaks down data silos, reduces dependencies and complexity, and gives companies direct access to all campaign information. Advertisers can also manage the access rights of service providers to different platforms. Accordingly, they gain a significant advantage in control and can continue their work without any extra efforts or major data leaks, e.g. after changing the agency.

However, advertisers need to either have the appropriate expertise for this endeavor or take time to build it up first, or they can call in external consulting. Relevant capacity should also be available in Purchasing and IT. This concerns the initial setup, but it’s comparatively manageable. Ongoing control is also possible with a small number of own employees.

Any company that can muster these resources is capable of implementing technical inhousing. For many advertisers, therefore, taking media buying into their own hands is a good starting point.

Hybrid in-housing

In hybrid inhousing, advertisers also work together with agencies. For example, they take over individual process steps or media types and hand over everything else to an agency. For example, the company can take control over negotiations with publishers and thus remove the purchasing component from the agency's tasks. Or it can take care of the digital advertising and commission a service provider with the analog channels. It is even conceivable to take over individual sub-steps, such as budget allocation among various channels with subsequent handover to the agency for operational implementation. Overall, many forms of hybrid collaboration can be found on the market.

One argument in favor of this is that advertisers can flexibly take over individual aspects of the entire media process, depending on their available resources, thus gaining more independence and knowledge. They can leverage their strengths and competencies, and work closely internally.

However, this requires agencies willing to embrace this model - and there are still too few of those.

Companies that decide in favor of hybrid inhousing should carefully consider in advance which components of media buying they could manage internally in the long run - even in case of headcount fluctuations. 

Full in-housing

The most complex format of self-directed media buying is full inhousing. In this case, companies work together autonomously and without agency support. The company handles all aspects of media buying internally - from technical infrastructure setup and strategic planning to implementation and evaluations.

The advantages are clear: advertisers have full control over their budgets, data, and content. Brand sovereignty remains 100% within the company and there is no dependence on other service providers, except for walled gardens.

However, this entails a high investment of time and money to provide personnel, develop know-how, and build up infrastructure. In-house experts are also in high demand in the labor market and therefore difficult to retain permanently.

Therefore, full inhousing is initially particularly suitable for smaller companies that only use a few advertising channels. Large advertisers are faced with an almost insurmountable task when aiming for full inhousing. Here we recommend a step-by-step approach based on the intermediate solutions described above. Of course, it is also important to have some flexibility and, depending on the progress, the process should be accelerated or decelerated. In addition, recourse should be taken to practice and expert consulting can be engaged throughout the process. 

Full in-housing: a utopia?

Thesis: Large companies that want to - and also have to - be present in all channels cannot sustainably afford fully in-house media buying. Not only do they have to train and retain the necessary talent, but they also have to constantly respond to changes in the market. Excellently trained and positioned teams also need someone to drive innovation. So it's less a question of initial resources and more a question of long-term cost efficiency. Small companies, on the other hand, that regard media buying as a manageable expense, eventually reach the limits of full inhousing along with their growth - after all, every company wants to develop. So for many advertisers, hybrid inhousing is the model of the future.

And yet, there are still too few agencies embracing this format and offering it to the customer as well as it is an opportunity.