News & Views
22/03/17 / news

Building an in-house trading desk for FMCG – Q&A with Michael Greene

In the latest of our Stack Q&A series, we continue the theme of in-housing and welcome this week Michael Greene, VP, Product Strategy at Audience Science, a leading programmatic technology platform. Michael shares his thoughts on programmatic in-housing, drawing on his experiences working with a major global FMCG brand to create their very own in-house model.

RK: Although the notion of an in-house trading desk is gathering a lot of attention in the market, it does often attract different interpretations. How do you define an in-house trading desk?

MG: I think of in-house trading desk as a very specific variant of in-house programmatic. To me, having an in-house trading desk means owning not only programmatic strategy, technology selection, and analytics, but also the day-to-day operations behind running programmatic ad campaigns. I’m certainly seeing a trend towards marketers wanting to own programmatic strategy and technology selection (what I’d call in-house programmatic), and rightfully so, but at the same time I don’t see as many marketers going as far as to build out the operational expertise necessary to run a true in-house trading desk.

RK: So for those who have taken the bold step towards taking strategy, ownership and execution in-house, what does it actually entail?

MG: There are both strategic and tactical elements to any in-house solution, both of which require strong accountability to ensure the strategy is coherent, and execution delivers meaningful value.

“I don’t see as many marketers going as far as to build out the operational expertise necessary to run a true in-house trading desk”

On the strategy side, marketers should be able to articulate clearly:

1. What does success look like, not only at a campaign-level, but also for the entire “in-house” strategy?

2. What pieces of technology do I need to execute against my strategy, and how do they need to work together?

3. When do I allocate budget towards programmatic? When do I spend elsewhere? What does the overall media mix look like?

4. How do I get agencies and in-house solutions to work together effectively?

The tactical side is much more about day-to-day execution and campaign management. Generally, I see this break down into three major roles:

1. Campaign management i.e. setting up and optimizing campaigns within a DSP.

2. Analytics i.e. Deriving actual insights that can fuel campaign management, targeting, or ad creative ideas (rather than just building and managing reports)

3. Ad operations i.e. the unglamorous (yet critical work) involving tagging and trafficking of campaigns to ensure correct measurement

“For marketers who bring both strategy and tactics in-house, they will benefit from increased transparency and speed of execution”

Some organizations may also have additional roles around audience and data management (for their DMP) requiring additional headcount and oversight. Taking on all these tactical and very operational tasks therefore doesn’t make sense for all – or even most – organizations. These tend to be very specialized skill sets that are prevalent at tech companies and agencies, but not so much within most marketing organizations.

RK: What are the obvious benefits of the in-house model?

MG: For marketers who bring both strategy and tactics in-house, they will benefit from increased transparency and speed of execution. While the industry is moving towards more transparent buying models, there is nothing quite like being hands on keyboard for understanding not only where your money went, but why it went there.

“In a post-ANA report world, I expect agencies to continue to build more transparent buying practices for their most demanding clients and marketers to follow in-kind by allocating more of the tactical/operational work to their agencies”

Speed comes with eliminating the game of telephone tennis between multiple companies – marketers, agencies, and tech companies – and centralizing control internally. This allows marketers to take new insights or ideas and apply them directly to campaigns, without going through middlemen. This speed of execution is one of the reasons I think direct response advertisers such as those in ecommerce of travel benefit most from an in-house trading model. For brand marketers, however, I find that bureaucratic, process-oriented cultures may inhibit this rapid test and learn approach.

For some marketers, there may also be a cost benefit, but it requires the ability to recruit and nurture specialized programmatic talent, and eliminate bureaucratic barriers to rapid decision making.

RK: Why do you think P&G / your major FMCG client took the decision to create their own in-house trading desk?

MG: When I look at large brand advertisers who have brought programmatic in-house, the desires for transparency and data ownership have been the primary motivations. However, marketers have largely continued to outsource the day-to-day trading operations to DSP managed services teams or specialized, transparency-oriented programmatic buying teams within their media agencies. In a post-ANA report world, I expect agencies to continue to build more transparent buying practices for their most demanding clients and marketers to follow in-kind by allocating more of the tactical/operational work to their agencies. Data, however, will increasingly move in-house as marketers look to connect data assets already managed in-house – like CRM – to programmatic ad buys.

RK: Do you see programmatic in-housing as a meaningful trend or more confined to advertisers of a certain size and category?

MG: Increased marketer involvement in programmatic strategy, notably selecting technology vendors and setting goals/KPIs isn’t going anywhere, especially amongst large advertisers with the capabilities (and budgets) to drive this.

I do however see the trend of managing day-to-day programmatic operations – a true in-house trading desk – as a trend limited to only to certain digitally native advertisers like Netflix, and heavily direct-response focused advertisers in ecommerce and travel verticals. This is a factor both of talent acquisition – it’s tough to hire the best programmatic operations people if you’re a brand – as well as a brand’s legitimate need to coordinate across many agency-managed media channels.

“I do however see the trend of managing day-to-day programmatic operations – a true in-house trading desk – as a trend limited to only to certain digitally native advertisers”

RK: Perhaps the biggest challenge for brands who are bringing programmatic in-house is how to bring together all the disparate media activities? Is this where the agency comes in?

MG: Absolutely. Agencies continue to be the primary players in buying traditional media like TV, but as more buying gets automated via programmatic, the agency still has a critical role to play in the planning process. This includes budget allocation and setting goals and KPIs for specific campaigns. No matter how good programmatic gets, you’ll never be able to completely automate media strategy. On the tactical side, agencies also have an important function in hands-on-keyboard campaign operations for many advertisers who lack that expertise and agility.

Stack I/O is a specialist consultancy enabling brands to accelerate the performance of their data-driven, technology enabled marketing activities. For support designing the optimal model for programmatic, please contact ryan.kangisser@stack-io.com