There are three main options for agencies looking to add programmatic advertising to their list of client services: in-housing, outsourcing to an ad tech vendor, or partnering with an agency that specializes in programmatic.
Each has its own unique benefits and drawbacks for agencies to consider. Below, we compare all three options before sharing our recommendation of the single most important factor to keep in mind when making your decision on how best to implement programmatic for your agency.
Pros & Cons of Programmatic In-Housing
Programmatic in-housing is trending up as programmatic itself continues to grow by leaps and bounds. According to the IAB, less than 20% of brands have brought programmatic advertising fully in-house as of 2021, but many have tested bringing a few programmatic capabilities under their own roof while partnering with another agency on the more robust elements of programmatic campaign management.
“Given the complexity of programmatic, there is one issue that brands, agencies, and tech providers share concern over, and that is the recruiting, training and retention of talent,” the IAB’s 2020 U.S. Report on Programmatic In-Housing explains. “Programmatic talent will remain in high demand for the foreseeable future.”
For large brands with the financial means to compete for that talent and license, learn, and integrate the programmatic ad tech that goes with it, the benefits of programmatic in-housing include:
- Complete control over your digital ad supply chain.
- Fewer touchpoints between the client and the team running their ad campaign.
- A dependable long-term solution for all future programmatic campaigns.
That said, the primary drawback of in-housing (and the most relevant aspect for most small-to-mid-sized agencies to consider) is the expense, particularly with talent in such high demand already. The complexity of programmatic advertising technology and its related data and privacy compliance requirements also make this a difficult type of tech stack to build and operate. Finally, the difficulty of learning these technologies and time required for leveraging them go hand in hand with the consideration of total programmatic expenses.
The bottom line: Between in-housing, outsourcing to an ad tech vendor, or partnering with another agency, in-housing is the most difficult and expensive option of the three. However, despite its barriers to entry, this option is generally the right choice for large and well-capitalized agencies that plan to make programmatic a primary pillar of their digital advertising service offering in the near future.
Pros & Cons of Outsourcing to Ad Tech Vendors
Working directly with an ad tech vendor is the oldest trick in the book when it comes to outsourcing your programmatic campaign management. It’s the most rudimentary solution of the three, but benefits of outsourcing programmatic campaign management to an ad tech vendor include:
- Providing a hands-off solution for agencies aiming to set and forget their campaigns.
- The price point—ad tech vendors will almost always be the cheapest option compared to partnering with a specialist agency or bringing programmatic fully in-house.
Among the drawbacks of outsourcing campaign management to a tech vendor are:
- Inability to offer personalized, high-touch service: Because their business model is primarily based around their product rather than campaign management, ad tech vendors are generally not set up to provide agency-style client services.
- A lack of transparency leading to the potential for ad fraud and/or brand safety issues: Again, most ad tech vendors are focused on their product rather than robust and transparent reporting.
The bottom line: While this option is one we generally wouldn’t recommend for most agencies, it has the potential to be right for agencies just getting started and looking for a cost-effective solution, or for low-spending clients that may care more about the quantity of a campaign’s ad impressions than their quality.
Pros & Cons of Working With a Programmatic Specialist Agency
Working with a programmatic specialist agency falls somewhere in between in-housing and outsourcing, with the quality of the specialist agency determining whether it’s closer to the former or the latter. Either way, a programmatic partner balances many benefits of in-housing with the ease of outsourcing to a tech vendor.
Programmatic agencies work with traditional, digital, full-service, and boutique agency partners, either directly or behind the curtain. Benefits of working with a specialist agency to provide programmatic services include:
- A choice between white-labeling your partner’s service offerings as your own or referring your clients directly to the partner to streamline your team’s workload.
- Your agency gets a complete ad tech stack without having to research, license, and pay for any of the technologies within it.
- A programmatic agency’s business model relies on the success of their clients’ campaigns. This is different from ad tech vendors, who primarily make their money on the technology itself—with an agency, the incentives are aligned for better results for your clients and your agency as a whole.
As with anything, there are also some drawbacks to working with a specialist partner, which include:
- Certain agencies are better than others, so choosing the right programmatic agency is key.
- While you’ll be saving time on hiring and licensing programmatic talent and ad tech, you’ll need to spend some of that time interviewing potential partners to find the right fit and liaising between them and the client (unless you refer directly).
The bottom line: We believe this option is right for most small to mid-sized agencies, or any other agency looking to get a successful programmatic service offering up and running as quickly as possible.
The Importance of Transparency in Programmatic
Perhaps the most important thing to consider when choosing your programmatic advertising partner is their ability to provide transparency into the ad buying and campaign optimization process. In recent months, high-profile stories on the prevalence of ad fraud in the industry have made it clear that cut-rate programmatic services aren’t all they’re cracked up to be.
In-housing is the easiest way to guarantee transparency, but if the expense or difficulty of doing so is prohibitive for your agency, finding a programmatic partner you trust can also provide exceptional transparency. For this reason, it’s of utmost importance that your agency knows the right questions to ask in interviewing potential programmatic partners, such as:
- Is the agency actually able to provide high-quality specialized programmatic services, or are they simply outsourcing campaign management to ad tech vendors themselves? If the pricing seems too good to be true for top-tier programmatic expertise, it probably is.
- Are they using industry-leading technology, or simply planning to run your clients’ campaigns through entry-level platforms like the Google Display Network? Furthermore, if they are using the best technologies, are they running enough campaigns to receive preferred pricing and pass that along to their partners?
- What fees and media margins are being factored into their pricing model?
- Are their experts optimizing your campaigns on a regular basis, or are they relying on an auto-optimization feature? A good agency should always have real humans reviewing your campaign performance on a regular basis to perform any optimizations that auto-optimization features miss. They should also be willing and able to provide in-depth optimization notes on a weekly or monthly basis depending on your agency and clients’ needs.
As you conduct your own research, be sure to check the online reviews of the agency, read their case studies and testimonials, and review their SLAs and onboarding processes to ensure they’re able to get your clients’ campaigns up and running as quickly and seamlessly as possible. If they can provide all of the above, working directly with the right programmatic specialists should end up being akin to bringing programmatic in-house without the cost, lead time, or hassle of actually doing so.
In the next blog post of our series, we’ll discuss how an agency can add programmatic advertising and how to scale your programmatic service offering to provide a new revenue stream for your business.
At PrograMetrix, we specialize in programmatic so you don’t have to. To learn more about how we partner with agencies to provide programmatic advertising services, check out our eBook or get in touch here.