In-house or outsourced buying: SA media agencies debate issue [part one]

Clients bringing their digital buying in-house, and excluding an agency entirely, is nothing new; in fact it is a debate that has been going on for many years. But is it a true threat to media agencies and something they should be worried about, particularly South African ones, or is it only for the big boys? Michael Bratt explores the topic.

Accenture Interactive in the United Kingdom is helping its clients to bring their digital buying in-house, assisting them in setting up trading desks. Industry website Warc reports that the UK’s advertising trade body ISBA, has found that “about two-thirds of advertisers are shifting towards stronger relationships with fewer suppliers and close to half of brands now have, or are considering establishing, an on-site (45%) or in-house (44%) capability”. On the other hand, some of the biggest digital companies in the world, such as Amazon and Airbnb, endorse using agencies for their buying needs.

Nowadays, advances in technologies, particularly programmatic buying, may be luring clients to think that it is easier than ever before to buy media themselves, but is it? Gaining access to these technologies is one thing, but having people who have the skill sets to operate them efficiently can be a challenge.

In part one of our look into this trend, here is what four media industry experts: Daan du Toit, managing director of Mark1; Chris Botha, group managing director of Mediashop; Thabang Ramogase, CEO of Mindshare SA and Matthew Arnold, head of media and analytics at Native VML, had to say on the matter.

Why would a client prefer to do this rather than go through an agency?

Daan du Toit: This largely comes back to the age-old question of outsourcing the marketing function. Do you focus on what you do best and let the specialists market your products, or do you try to do everything in-house?

Chris Botha: This would only happen on occasions where the client feels that they are not gaining sufficient value from their agencies, and that the service they (the agencies) offer is on parity with what they (the client) can do themselves. We as an agency have significant global and local investment in not only tools and technology, but people and skills. Remember, the digital world is no different to the traditional media world. If all your agency does for you is a schedule you could conceivably do yourself, you might also move traditional media in house. It’s about value from the agency – and not about traditional or digital media.

Thabang Ramogase: In our experience it’s not binary. Clients want to own their data and either build or select some of the technology and infrastructure such as DMPs. However, in the vast majority of cases agencies are involved throughout the process, and indeed continue to support these efforts as well as actually execute the campaigns. It’s not an either or scenario, it’s never in-house or agency. It’s about close collaboration amongst all parties involved, and that increasingly includes creative agencies. It’s why we’ve set-up our FAST teams, which act as catalyst to help clients quickly assemble all the constituent parts of the solution.

Matthew Arnold: Globally businesses are looking to cut costs and increase the return on investment. Media buying is a key talking point due to the large volume of media spend and marketers drive for increased cost efficiency. Naturally this means that many clients may consider doing their own buying.

Will this trend be coming to South Africa anytime soon? 

Du Toit: Bringing some element of digital buying in-house is not something that we haven’t seen before, but generally this is often accompanied with some technical execution issues. We do feel that some local businesses will take programmatic buying in-house in the longer term, and it is likely that larger businesses will have more success in executing pure programmatic campaigns effectively.

Botha: It is a trend that has been around for many years in traditional media, so of course it will also happen in digital. The clients who receive massive value from their agencies will continue to invest in their agency capabilities, and place their media through businesses like ours. The clients who don’t, wont…

Ramogase: The full fat scenario you describe hasn’t happened elsewhere, so not sure why it would happen in South Africa.

Arnold: This trend already exists locally with various brands like Samsung, Discovery and FNB doing part of their media buying in house.

Do you see this trend as a threat to South African agencies?

Du Toit:  I do see this trend as somewhat of a threat to some agencies, but I do not think this should be seen as a dominant threat given the value added by good agencies through-the-line. Great work is great work and that will never be redundant.

Botha: Not at all. This is not something new. It is only a threat to you if you don’t deliver value to your clients.

Ramogase: No, Accenture is superb at deep systems integration work, and I’m sure they can support clients with some of that heavy lifting. They have zero knowledge on the practical running of media campaigns via programmatic, which is why clients turn to us when they need practical expertise and experience in developing and deploying these solutions.

Arnold: For agencies that specialise purely in buying media this could be a threat, but not for agencies that are focused on strategic planning. It may require some agencies to shift their approach a little bit, but at the end of the day there are a lot of economies of scale at play that limit many clients from running their own media at the same level as an agency can. Large spending clients that have the capital to invest in talent would be the most likely candidates to adopt this trend, but smaller clients would be hard pressed to replicate the level of expertise.

What do agencies offer that in house digital buying won’t?

Du Toit: At Mark1, we are passionate about growing the digital industry in South Africa and actually welcome this thinking that acknowledges the power of programmatic. We would be very interested to have discussions with more clients that require assistance around programmatic media buying. We see the global as well as South African digital landscape of the future including both agency and in-house programmatic teams.

Botha: We offer a number of things. For starters the strategic input and knowledge about the platform that only a dedicated, committed resource will have. We then also commit to training and up skilling of our staff on global best practice on an ongoing basis. We have preferential deals (through our global partners) with the likes of Google and Facebook which means we can beta test innovation before any other client. We have massive teams who look after continually upgrading our programmatic buying tech, and improving our tech stack. We have teams of people who globally monitor the white list and black list of problem sites. We have exposure across more than a 100 clients where learnings can be applied. Our clients are with us because they see the benefit of these discussions on an ongoing basis.

Ramogase: Clients value the cross-industry knowledge, the ability to leverage over five years of experience of doing this work on the ground around the world. We’ve seen and experienced things that will save them time, money, and headaches. Furthermore, we are tapped into the industry and have strong views of where clients need to take their programs into the future, and have the partnerships and contacts from Silicon Valley to Shanghai, from Copenhagen to Cape Town in order to make that happen. There is also the old but obvious point that media is a scale business. If you work with one of the large agencies / groups you benefit on the pricing due to scale, if you go it alone, obviously you do not…That would apply in digital when it comes to private marketplaces as well, even if executed programmatically.

Arnold: Digital media is a dynamic field with changes to platforms and innovation happening extremely frequently. It requires a mix of specialists across the various platforms; a jack of all trades approach does not deliver the same level of results. Agencies offer clients access to a range of specialist resources without the need to cover their overheads, making it far more cost effective. Coupled with the really good experience from working across brands and categories agencies are well positioned to provide best in class skills at an affordable investment.

Other insights

Du Toit: The main challenge will be to build in-house teams with the right skills and to afford the technology needed. For clarity, when I refer to programmatic media buying, it is using a Demand Side Platform and adding layers of data to run effective media campaigns to specific audiences, not just running a few ads on AdWords or Facebook.

Botha: Bad agencies who don’t add value to their clients will lose their clients in the long run. Good agencies who add value will continue to grow and develop. Brands like AirBnB and Amazon still use media agencies. That has to say something.

Ramogase: It’s about partnership and collaboration, and there is no one size fits all model for a client. We work closely with them to ensure their best interests are taken to heart, and we are developing a model for them that has been stress-tested elsewhere and is future-proofed for the digital disruption we see gathering pace rather than diminishing over the next years.

Arnold: At the end of the day the client should be looking for a media team that delivers value through strategic input and tangible business results, if this team sits internally or within an agency is neither here nor there.

Follow Michael Bratt on Twitter @MichaelBratt8