Foxtel has taken programmatic trading in house with a demand side platform and trading team up and running.
The move is no secret, but Foxtel head of sales and marketing Ed Smith has confirmed the news and thinks it is potentially the shape of things to come for top tier advertisers.
“We have our own programmatic buying team and I think we are one of the first if not the first in the country to do so”, Smith told AdNews.
MediaCom had handled that side of the business as part of its broader duties but Smith said that data and trading “should be a core competence” for firms investing significant sums on acquisition.
“There was nothing underhand, MediaCom remains our partner [across all other facets],” said Smith. “We have a clear vision of what we want to do with our data. “[Taking buying in house] is not through a lack of performance from MediaCom.”
The move is more about restrictions around customer data, and shared customers with Telstra to whom it can and can't market, plus those customers that opt out of sharing data. According to Smith, a former News Corp and St George Bank marketer, that left a relatively small pool in which to fish.
“Having our own platform and data allows us to identify those coming in to [the Foxtel properties] and target them.” He added that partners to date include include Google (Double Click - Bid Manager), Adinfinity – VFA (Visibility tracking/optimisation) and the Datalicious Optima Hub as data management platform (DMP).
MediaCom boss Mark Pejic said the move was well trailed and that the agency had helped Foxtel in developing the DSP model. “We supported them, we always do and we're very happy with the current arrangements,” said Pejic.
Agency holding groups have acknowledged the threat. But they have suggested that even those with significant local buying power may find themselves “on their own” against the big guns in the exchanges. Agency bosses think those that do try to handle buying in house might find it's not as easy as the platform providers suggest.
Smith agreed. While his programmatic team is understood to be lean, he said that the total investment was not cheap. “You have to have enough scale to justify it. Foxtel is one of the largest advertisers in the country.” Nielsen estimates put Foxtel's 2013 main media spend in 2013 at $56.8 million, although the total figure is likely to be far higher as Nielsen's estimates do not currently factor in sponsorship, or any digital spend outside of display, such as video, search or social.
In terms of a media spend tipping point, Smith did not want to guess at what level marketers might consider in-house trading, but suggested that it would likely be limited to “telcos and top tier” advertisers. “It's a big investment. The efficiencies have to be worth it.”
One telco with whom Foxtel has a close relationship is Telstra, the pay TV provider's co-owner, along with News Corp. It has a significantly higher spend than Foxtel, but is thought, having looked at the possibility of taking buying entirely in house, has been deterred by the required ongoing costs and resource.
Instead the telco uses a hybrid approach via its relationship with OMD, and when buying power is required at the highest level, leveraging the Omnicom-owned Accuen trading desk. Telstra has the ultimate say in technology decisions. Other partners include Adobe, DoubleClick, Adap.Tv and TubeMogul.
“It's definitely not in-house,” said an OMD spokesman. “It's completely integrated into the agency team, with account managers and trading people on it. The Telstra desk is big and has some buying power, but it also has the weight of the rest of the agency behind it, so we can work as a combined force.
“That said, Telstra is very much involved with the technology deals we do, because, well, it's Telstra.”
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