As debate rages, some brands go in-house to protect first-party data

November 12, 2014 by Experian Marketing Services

Published in AdExchanger. 

“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media. 

Today’s column is written by Jay Stocki, vice president of digital services at Experian Marketing Services.

If they haven’t heard it already, every chief marketing officer will soon be asked this question: “Do you plan to take your programmatic ad buying in-house?” The in-house programmatic trend is really about something broader: Brand marketers are becoming more data-driven and want to empower their organizations to take an active role in the data-driven ecosystem.

When evaluating their place on the in-source vs. outsource spectrum, brands need to weigh a number of factors, including cost, trust, transparency, capabilities, experience and bandwidth. Some companies are moving toward an in-house model because they are concerned about protecting their first-party data. First-party data is one of a brand’s biggest competitive advantages. The last thing they want is to share it with outside organizations and, potentially, their competitors.

Making the most of first-party data

While data is the fuel that drives programmatic success and should be a high priority, just getting all the first-party data out of disparate internal systems can be a Herculean task. Most brands do not have the experience, security and compliance know-how to manage and protect that data. But even fewer have the expertise, capabilities and bandwidth needed to maximize data usage in programmatic ad buys.

In addition, first-party data is not enough, in and of itself, to drive programmatic success. Marketers must understand when and how to combine and enrich their first-party data with second- and third-party data. Brands need to work with agencies and data companies that have access to information about the behavior and purchases that take place outside the brand’s domain.

Further, brands need trusted third parties to help prevent liability issues and ensure that all sides follow best practices. For example, if a brand wants to reach its top customers through an addressable TV campaign, it needs to use its own data to determine its audience. It then needs media and subscriber data from a cable provider, plus a direct-match partner that can serve as the middleman connecting the first-, second- and third-party data sets.

Take a hard look

As more brands announce that they’ll manage their programmatic campaigns internally, interest and debate on the subject continue to grow. However, in reality, even the most pioneering brands aren’t taking everything in-house because fully in-sourcing programmatic requires overcoming a significant set of challenges and finding the cash for a staggeringly large investment. Also, brands can’t function effectively today on a programmatic island; they need to build and capitalize on a network of relationships.

The brands that are seeing success as they shift to internal programmatic are not doing so in one fell swoop. They have been through an exhaustive review, usually with the help of one or more third-party vendors, and have come to an understanding about what they are good at, what they want to control, and where they need and want support.

Brands that are considering in-house programmatic should answer the following questions and earmark what they will be responsible for maintaining and which responsibilities will be outsourced: What demand-side platforms and data-management platforms (DMP) are the best for this situation? How will the first-party data that resides in a variety of internal systems be integrated into the DMP? How will the third-party data be integrated? Who will maintain these connections and enact strict security controls? How many programmatic data scientists are required to maximize the data investment?

Trying to manage programmatic in-house comes with its own set of obstacles and challenges specific to talent and experience. The ad operations, data scientists and other resources required are difficult to hire in the open marketplace. A small town in Middle America may not have the capacity or the draw to get the right talent. Even when a brand has acquired the right execution capabilities and talent, the costs for seats on multiple platforms and the need to constantly test, train on and develop technology may be overwhelming.

On the vendor side, the in-house movement will drive more transparency in the brand-agency partnership. Progressive brand marketers today are demanding complete transparency from their vendor partners and want control over vendor selection. The vetting process should screen for vendors with whom a brand can build not just a solid working relationship but also complete trust.

Every CMO should evaluate their current approach to programmatic. It’s an exciting time for every vendor, agency and brand marketer, and by taking an active role in the programmatic process, brands will reach new heights of marketing excellence.

Follow Jay Stocki (@jstocki), Experian Marketing Services (@ExperianMkt) and AdExchanger (@adexchanger) on Twitter.