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The advantages and challenges of programmatic in-house for mobile app developers

By Vladimir Khudyakov, CEO at hybe.io

No doubt, more brands and app companies are leaning toward creating, customising, and implementing programmatic strategies in-house. This represents a significant shift in media buying, and can also be considered to be a part of a larger transformation of the whole communication strategy.

In this article I am going to talk about the advantages and challenges of programmatic in-house for mobile app developers, as the rise in popularity will also see many run into unforeseen hurdles.

In-house programmatic platforms are starting to change the adtech market landscape in the recent 5 years and some significant changes are underway. The number of platforms keeps growing and the interest in them. 

In-house programmatic platforms are  expected to gain definite momentum in the near future. However, like with any new market solution, in-housing has its points to consider. We’ll discuss the major ones in this article. Let’s start with the challenges:

– Programmatic has low awareness among app developers who mainly worked with affiliate networks. As a result, not all clients are ready to share all the data needed to succeed (like white lists from the other channels or non-attributed events).

– App developers should understand that the bulk of work ought to be done on their side, and they should be ready to share more data with the platform than they do with ad networks. For example, user behavior data helps to make the campaigns more effective from the get-go and start reaching the KPIs faster than without it.

– App developers should allocate internal resources to run programmatic in-house. At the same time, some platforms give the option of full service, providing the same level of transparency. It takes between 1-3 months to find out if in-house is working well without previous deep experience in programmatic.

– Programmatic in-house platforms don’t own any inventory, unlike ad networks. Hence, they have more control over their own inventory, that’s why it’s easier for them to work on a CPI basis. However, the growth of in-app header bidding puts the DSPs and ad networks in the same position.

– In programmatic, a client pays on CPM basis what causes risks that eCPI might be much higher than target CPI initially due to a learning phase of the Machine Learning algorithms.

– As in-housing is quite a new channel, most of the platforms have more sophisticated interfaces that are not optimized for complex campaigns. That becomes a constraint for app developers for scaling their programmatic activities in-house, especially when they want to run their campaigns across different geos and with diverse strategies.

However, what are the advantages of in-house programmatic, considering the steady growth of walled gardens?

Even though there are some challenges, the future of programmatic in-house is fairly optimistic. App developers continuously strive for more transparency and reduce the tremendous 30-50% margins imposed by walled gardens and ad networks. More app developers will try programmatic in-house as the app market steadily grows, and more developers would like to try new channels to perform better. Let’s take a look at the advantages:

– The cornerstone for the choice is still performance and transparency. Using in-house programmatic, app developers understand how much they pay for an impression to the publisher. They can easily compare the cost of in-housing, programmatic managed and feel the difference.

– App developers understand where to find better users, which placements, audiences, and creatives perform better. In-house programmatic is flexible and gives plenty of tools for the performance analysis, such as SQL accessibility of the campaign data on OpenRTB bid request level.

– Using programmatic in-house, app developers have full control over the media buying for example targeting options (SSP, set a CPM bid limit, whitelist/blocklists, detailed targetings like session depth, app ids). Moreover, sophisticated buying strategies are available as Dynamic Creative Optimization in user acquisition and retargeting, ad sequencing, use of different APIs to deliver custom events that aren’t sent to MMPs, inventory that is not available in ad networks, etc.

– App developers can also use 3D party algorithms to optimize CPI and CPA, own ad servers, user interface, creative platforms.

– The mission of in-house is to provide a complete picture of advertising. It should show how the auction works, and grant an extensive set of tools for the analysis. That means app developers can always have access to raw data on ad campaigns for the internal analysis and custom reports (split on different parameters like OS version, SSP, LTV prognostics).

 – The last but not the least advantage is using the in-house data to improve performance in other advertising channels. Using data from in-house programmatic, app developers can find more hints for enhancing the efficiency of creatives, placements in the other channels to find the right audience for their apps.

Now, we have reviewed the major points to consider while implementing programmatic in-housing. And like many other channels, it comes with its favours and challenges. Looking to the future, it seems that many threats appear to be advantages for app developers while advertising if dealt with in the right way.

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