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Programmatic moves in-house

News, 23 April 2015

NEW YORK: The programmatic pie is getting bigger but agencies' share of the pie is getting smaller as more and more buying is moving in-house, new data has shown.

According to programmatic ad platform Index Exchange, through which some 60bn ad impressions are bought every month, in-house brand spending accounted for 15% of purchases at the end of 2014, up from 11% a year earlier.

At the same time the share of spending by agencies, trading desks and tech company-managed services had all fallen.

"It's absolutely remarkable," Andrew Casale, Index Exchange CEO, told Advertising Age. "It's the only category that hasn't stopped growing."

He suggested that there was an element of ad buyers being frustrated with the approach adopted by ad agencies. "It does appear to be partially motivated by transparency," he said of the in-house shift.

There was, he added, a "desire to get that much closer to the media and reap the benefits that come with it."

Another factor may be the development of simpler buying solutions. Speaking at last December's Real-Time Advertising Summit, Rich Astley, UK managing director at video advertising platform Videology, noted the trend to "single-stack solutions", which was helping advertisers cut out the traditional media-buying agency.

But Astley added that there were still things agencies can provide that many clients struggle with.

"The biggest challenge of bringing it in-house is keeping up with the expertise and the knowledge," he explained. "You need to really work to up-skill your team members and hire people with expertise."

While the share of in-house spending is growing, Index Exchange figures also show that programmatic spending in total is rising so agencies are not losing out in dollar terms.

Casale pointed to financial and CPG as the two particular categories that are leading the in-house push.

Data sourced from Advertising Age; additional content by Warc staff