Advertisers are starting to move media buying in-house- Vytautas Paukstys
By Zion Rufus
Today, most marketers have begun to take more control of their media and digital technology relationships as changing client needs continue to provoke large scale agency realignment.
Amongst others, one of the major motivators of in-housing is that the move helps brands to cut agency fees and allow clients to more efficiently combine creativity and business under one roof.
An international study commissioned by digital consultancy Kepler, set the record for media agencies. Based on the survey of 150 senior marketers at $1bn+ revenue companies in the US, UK and APAC, revealed that as brands continue to in-house technology and talent – and as first-party data capabilities and automated buying platforms become more important to campaign performance – a gap has formed between brands’ needs and media agencies’ abilities and business models.
“Advertisers are starting to move media buying in-house,” Vytautas Paukstys, Founder and CEO of Eskimi, said during a live session at the MARKETING EDGE Stakeholders Quarterly virtual summit.
As brands continue to strengthen their in-house expertise, agencies are compelled to offer more by delivering a wider range of services, with data and technology capability, flexible talent, and strong relationships with the tech platforms emerging as dominant requirements. According to Kepler, media buying alone is no longer enough.
“We are now beginning to see a hybrid model where brands are managing digital media themselves and using agencies as a consultancy even as their in-house operations grow fast. What is happening is that agencies would also be looking for a new model and how they can find their place in this market which is changing rapidly as brands continue to take control,” Paukstys explained.
In-housing has always been a factor for agencies, but the availability of ad tech and martech, the rise of automation and data management requirements have added new pressures.
The Kepler survey revealed that more than three quarters (83%) of marketers are expanding or plan to expand their in-house media technology, and this intent is event stronger (92%) at companies with over $10 billion in revenue.
In the same report, larger enterprises appeared to be more committed to the idea, with 63% of respondents from companies with $10 billion or more in revenue considering full in-housing; 78% of marketers say they will prioritize agencies which have a talent and trading model that can flex around their in-house operation; 73% agree they need greater in-house technology expertise to partner with technology giants; 71% believe their digital media performance is suffering because their media agency partner/s do not have strong enough relationships with the technology giants; three quarters of senior marketers agree that trust and transparency have become a major factor in media investment decisions. Half of them state they will not use media agencies that cannot provide complete transparency of trading practices, and a similar percentage (51%) indicate that corporate ethics will increasingly influence how and with whom they invest digital budgets.
The data also suggests that traditional agencies are increasingly vulnerable, with 94% of respondents stating they will likely review their media agency relationships due to data and technology’s rise in importance.
Commenting on the research, Matt Green, Director of Global Media Services, World Federation of Advertisers’ (WFA) said: “The traditional model is becoming stretched. And while price is important, for many clients this is one factor among many. Clients need to focus on finding fair and appropriate incentivization models and agencies need to set themselves up to adapt to these changes.”
“With the rapid transformation of the industry, media agencies are being asked to be many things. Clients expect their agencies to offer depth in digital and data, excellence in media planning, breadth in market knowledge. Agencies should be diverse and inclusive and should be offering responsible, sustainable and ethical media solutions.”
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