Bayer touts $10m saving after taking programmatic in-house
After bringing programmatic buying in-house, pharmaceutical giant Bayer saved $10-$11m over the last year, according to Paul Gelb, head of programmatic and social (Digiday).
Key points
- Company plans to bring all digital media buying in house by 2020
- Began preparing for in-house in March 2017, created hybrid model with former partner MediaCom
- Now works with ‘transitional’ agency MightyHive (owned by Martin Sorrell’s S4 Capital Partners) on execution while building out internal resource
- Company has simultaneously shifted more dollars from TV to digital
- Gelb says Bayer has negotiated better pricing via every ad tech vendor bar one versus what it paid agency
- “We have ownership now of our Google stacks; [and] not just our stacks, but our instincts.” - Joshua Palau, Bayer VP/media strategy and platforms (via Warc)
- “We now have all [our] structured data in one place … [and] we can actually check, measure, and see how performance is going.” – Joshua (via Warc)
First programmatic, then digital – and consultancies are pushing the switch. Last year Accenture Interactive co-produced a guide to in-housing with the IAB, and alongside others, has been hoovering up agencies that can help brands towards in-house digital buying. That Bayer ditched MediaCom for S4 Capital’s MightyHive will irk WPP, and touting eight-digit savings provides ammunition to other marketers.
$10m buys a lot of in-house resource, provided brands can find it. Quantifying the premium marketers are paying to hire programmatic talent would be useful data. If more brands are in-housing – as studies by the ANA and IAB indicate - that scarcity premium will rise.
Nevertheless, brands are pushing ahead. A recent IAB survey of brands across Europe suggests only 2% have no plans to take at least some aspects of programmatic in-house. It found marketers are thinking beyond programmatic, and in global terms.
Whatever agency groups say about remaining part of hybrid models or on retainer to brands that in-house, programmatic has been a significant profit centre – and it’s being eroded. If brands bring more digital in house - now half the ad market – it raises questions around how many groups the ad market can ultimately support. Some, such as Publicis, have reacted by spending billions on data and customer relationship management (Epsilon), following acquisitions by Dentsu (Merkle) and IPG (Axciom). If another big deal is in the offing, it would come as no surprise.
