By Matthew Greenhouse, US General Manager at MINT
The relationship between advertisers and agencies is changing. The trend of in-housing, where brands internalize some of the tasks traditionally handled by external agencies, has been picking up pace over the past decade. Some 82% of advertisers have their own in-house agency, according to the Association of National Advertisers (ANA), up from 58% in 2013. In the UK, it’s a similar picture; ISBA’s State of In-Housing report shows that 79% of brands are already in-housing to some extent, with a further 10% planning to do so soon.
There are multiple reasons for this shift. Driving cost efficiencies is at the top of the list, while utilizing the deeper brand and institutional knowledge of internal staff were also cited as key contributing factors. Additionally, an increasingly complex and restrictive legislative environment is prompting advertisers to make sure that they fully own, control, and protect their data assets.
But while adoption of in-housing is surging, the true picture is less black and white. Agencies are hardly out of the picture, they are simply finding themselves playing a different role. A hybrid model of managing advertising operations – which encompasses agencies, consultancies and in-house expertise – is becoming the new reality and all stakeholders stand to benefit from it if they can find a way to maximize its value.
Working towards a centralized model
Organizations are increasingly reliant on shared business intelligence. In a data-driven world, this depends more and more on the effective implementation of data governance and transparency. When brands farm some media tasks out to agencies while in-housing others, having transparent procedures and common standards in place is key to achieving a successful operational model. In the absence of a framework, they open themselves up to inconsistencies and misuse of information and assets. The consequences are far-reaching, from brand compliance issues and inconsistent campaign settings to wasted resources and ineffective feedback. This is particularly an issue for multinational brands with different product lines and third party partners.
Lack of visibility is another roadblock that can undermine the hybrid model. While brands may feel the need to tap into specialist agency expertise, they run the risk of not having visibility of the full campaign cycle, from the choice of channel mix to that important feedback loop that allows them to make decisions to optimize spend. And this is not a problem only concerning campaign managers. Increasingly, CMOs and CFOs require access to campaign and media spend data; a data-driven approach is essential to translate the impact of investments into business outcomes.
If the hybrid model is to succeed, an important realignment is necessary. Brands need to be in a position to centralize resources, processes, and workflows and, by doing so, build a shared knowledge base that enables multiple stakeholders to access information simultaneously and efficiently, while working towards a common goal.
Joining the dots
The demands inherent to the open web present additional complexity. Today, besides agencies, advertisers work with a multitude of partners and intermediaries – DSPs, SSPs, ad networks, data providers, etc – with teams specializing in different channels, from search and influencer marketing to retail media. As a result, they face the challenge of making sense of millions of data points generated by these layers and transferring information across workflows. But, even in organizations that consider themselves digitally mature, advertising teams haven’t yet caught up with the digital transformation that has helped streamline data, processes, and workflows in other business areas.
We are used to organizations using Enterprise Resource Planning (ERP) software to manage internal resources such as finance, accounting, human resources, and supply chain partnerships. Similarly, Customer Relationship Management (CRM) software does a great job of automating some marketing processes and handling customer interactions. However, these platforms don’t provide adequate tools to support advertising operations.
The reality is that today’s advertising teams are having to deal with manual, repetitive processes which are causing inefficient workflows. Additionally, poor data integrity holds them back from achieving a full view of the campaign cycle, with data often stored in disparate internal systems – emails, spreadsheets, dashboards – and external platforms, including agency infrastructures.
The age of automation and AI
Where legacy systems have come short, newer technologies such as cloud hosting and artificial intelligence (AI) have successfully helped businesses in their digital transformation journey by introducing automation in media operations.
Brands can now consolidate all information relating to advertising in one place, accessible as a single source of truth. This ensures that all stakeholders can access the data relevant to their roles and responsibilities and are empowered to take action. This centralized source of truth also supports any existing relationships so brands can still effectively utilize agencies, regardless of how they balance in-house and outsourced activities. And if brands work with multiple agencies in different jurisdictions, it is critically important to have a centralized system in place.
Once advertising resources are centralized, it’s possible to begin simplifying and automating processes and workflows at all levels of campaign orchestration, from strategy and planning to execution and reporting, starting with automating manual, tedious tasks to drive efficiencies. From reducing errors to improving speed, automation helps teams become more productive and compliant while freeing up time to focus on higher-value tasks.
Here is where AI can significantly transform advertising operations by introducing optimization capabilities. AI tools empower advertisers to make informed decisions at every step of the media workflow, continuously refining recommendations on how to optimize spend or choose the best campaign parameters according to KPIs. AI can also improve governance, by analyzing the ever-increasing number of data points in the workflow, flagging any areas that don’t comply with the organization’s rules so these issues can be dealt with. At the next level of AI sophistication, large language models (LLM) enable humans to interact with data through intuitive communication, allowing advertisers to devise media plans more quickly with better insights, increase speed to market, and drive better performance.
Critically, it gives advertisers greater confidence in the impact of media planning on their investments, and with global ad spend projected to reach one trillion dollars next year (WARC data), it could be transformative for a company’s bottom line.
As for brands’ relationships with external agencies, there will always be a need for strategic partnerships. Agencies need to place stock in the opportunities that the new hybrid model offers, rethinking their services to demonstrate their added value. Advertisers will still turn to consultancies for specialisms, such as ecommerce and creative talent, but more and more they will expect integrated services. As the recent Institute of Practitioners in Advertising (IPA) ‘Shift Happens’ report says: “agencies must shift from being suppliers of marketing services to becoming truly integrated partners”.
The quest to achieve greater governance, efficiency and transparency is prompting advertisers to bring media operations in-house, and the good news is that now they have the tools to do so thanks to cloud technologies, APIs, automation and AI. Stronger advertiser capabilities are not to be seen as a threat to brand-agency relationships; on the contrary, if each party plays to its strengths, the future may well be simpler, more collaborative, and more transparent.
