To in-house or not? How brands are taking back control and how the role of agencies is evolving
by Toccara Baker
Posted on 11-13-2018
As digital redefines how brands relate to consumers, massive changes in technology and consumption habits are transforming advertising. In response, business transformation is in full swing, and the pace of change is staggering.
The opportunities for brands are huge, but so are the risks. In a world dominated by data, issues around consumer privacy and brand safety have raised the stakes for brands in recent years. In response, brands are reconsidering how they run their advertising operations, and where the divide lies between them and third-party suppliers. It’s about injecting much-needed transparency into the value chain, and at the same time about brands taking more control of their data in order to better meet consumer expectations in this new world. It’s no surprise that, according to a survey by Adobe last year, up to 62 percent of European brands are looking to take full ownership of their media buying by 2022.
A time of disruption
This is a pivotal moment for brands and all sides of the advertising supply chain. Consumer digital touchpoints continue to proliferate. Marketers face an explosion of content across these channels. Meanwhile, consumer expectations keep growing. Just as digital gives marketers more choice than ever about how they engage with consumers, it also gives consumers more power to engage with brands on their own terms.
In this context, data has become the lifeblood of marketing. The holy grail in advertising is now to serve the right content to the right customer at the right time. Personalization is the end-all-be-all, with brands on the hook to create experiences that engage consumers more relevantly and based on real-time needs.
To meet these demands, there is increasing focus on the buyer journey and how advertising channels need to be optimized in response. Brands are getting busy collecting data from across channels and building new attribution models to understand and measure how consumers are engaging across these. On top of that, they need to deal with large volumes of content to be managed, optimised, and delivered to a more diverse set of audiences. At times this can be overwhelming.
Increasingly all these elements need to connect together: Brands need to find ways of unifying their customer data, which includes orchestrating its collection from multiple sources within the organization as well as understanding how to derive insight—and take action—on it.
This is where Artificial Intelligence comes into the picture. As its capabilities grow across the marketing technology stack, AI becomes an ever more powerful tool for media planners as they look to accelerate data collection and improve decision-making based on data.
So the perfect storm is set – a confluence of technology disruption, mass consumer adoption and rising consumer expectations. But as data becomes the currency of this new economy, we hit the ‘privacy paradox’: As data privacy controversies emerge and regulatory scrutiny increases, brands also have to consider how privacy needs to inform everything they do.
Taking back control
This is where the idea of control comes in. As enterprise data converges, brands are becoming aware that it’s important to take more control of their advertising operations so that they can join data from across their organizations and make smart decisions with it. It also allows them to better understand where emerging technologies like AI can add value. More critically, it allows them to understand what data is being collected—and how it’s being used—to help them responsibly unlock its value while building and sustaining the trust of their consumers.
In response, brands are starting to explore new operating models for their advertising. The picture is varied: A minority (about 18% according to a recent survey) have already moved their programmatic functions in-house, and plan to continue in this path. A considerably larger group (47%) are adopting hybrid models whereby they are partially take these functions in-house. Many are still exploring their options and remain undecided about how to move forward. About one-fifth have no plans to in-house at all. [Source: Advertiser Perceptions Omnibus April 2018]
In this frame, agencies are looking towards a new future, and it’s an exciting one. More and more, the value of agencies is centered on their capabilities around consultancy and creativity. The evolution of the agency model is increasingly allowing agencies to get better paid for these capabilities and for the depth of experience they bring to the table. Brands also need to partner with agencies to keep up with best practice and stay on top of trends in an ever-changing market environment. So, far from playing a diminished role, agencies are reevaluating where their core strengths lie and reaping new value from them.
What does this new era of control look like for brands? Greater ownership of data will mean fuller ownership of technology contracts and deployments, increased transparency into costs along the advertising value chain, and a growing onus on brands to set clearer roles and responsibilities between themselves and their suppliers. It also means greater responsibility for brands to define success—and drive business results—based on data, and with that the need to ensure they have safeguards in place to responsibly unlock the power of data, in order to build and sustain consumer trust.
However things shape up, the future points towards a model which places advertiser needs at the center of the value chain. This is in turn reflective of the reality that consumer needs—the need for brands to stay relevant with consumers, in a relationship founded on trust—are themselves at the center of everything brands do. On this basis, the whole value chain needs to embrace this evolution as a win-win.
Topics: Digital Transformation, advertising, artificial intelligence, Content, data, digital, Targeting, UK, UK Exclusive, Digital EMEA