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Insourcing versus Outsourcing Ad operations cost comparison and analysis

AdOps is to marketing what plumbing is to homeownership: a task that’s essential to get right, and thus best left to the people who have experience delivering error-free work.

In terms of ad ops, outsourcing to a firm whose sole purpose is managing any or all aspects of campaign management can deliver error-free work save publishers, ad tech platforms, agencies, and brands between 50% – 70% in ad operating department costs.

Let’s break this down.

The Real Cost of In-Housed Ad Trafficker

According to Salary.com, the average AdOps associate salary in the U.S. is $63,775. That sum is likely to rise given the very real Great Resignation. All over the country brands struggle to fill open positions, and many are resorting to sizable signing bonuses to lure staff to their ranks. And, marketing salaries are on the rise, some have grown by as much as 50%.

Besides, an annual salary is just the starting point, there are a lot of other costs involved with keeping full-time employees on staff. According to the Small Business Administration, “There’s a rule of thumb that the cost is typically 1.25 to 1.4 times the salary, depending on certain variables.”

 

Where do those extra costs come from? They start with payroll taxes, which are mandatory. A brand’s share of FICA, aka Social Security. That rate is 7.65% of the AdOp team member’s compensation up to the annual wage base, which is $132,900 in 2019.

Next, you’ll need to pay an unemployment tax to the State in which that employee works.

Now let’s talk about bennies, one of the most valuable recruitment tools available to companies when seeking talent. Unless you manage your 401(k) internally, the annual administrative costs per employee range from $750 to $3,000. And, of course, there are your matching fees, meaning your company contributes an amount that matches what the employee puts in until a cap is reached.

Then there’s healthcare. According to the Kaiser Family Foundation, the average 2019 cost of insurance per employee for family coverage was $20,576 with workers on average paying $6,013 towards the cost of their coverage. They may be higher, depending on what you cover (dental and eye care cost more).

Now let’s talk about life insurance, which typically costs $.16 per $1,000 covered.  If like most companies, you offer a coverage amount that equals the employee’s annual salary, you will pay a $3,188 life insurance premium for your internal campaign trafficker.

Once they’re on staff you’ll need to supply them with the tools of the trade: a space to work, a computer, software licenses, communications fees, and other perks you may offer, like Pizza Friday, coffee, and snacks.

Those costs can vary, but for argument’s sake, let’s say you’ll pay for basic office software, which averages about $500 per year. Additionally, you’ll need to spend a week or two training that employee on your internal systems, and it could be a month or two before that employee is operating at full capacity.

There’s another hidden cost that is quite substantial: turnover. Over 30 million people left their jobs from January to August 2021; that’s one out of every four workers. As it is, AdOps is viewed by many employees as an entry-level position, a stepping stone to bigger and better things. And in this day and age, poaching is incessant, so you can expect your newly hired AdOps trafficker to receive competitive offers from headhunters once his or her training is complete and has gained some experience.

So what will it cost to replace a new hire? According to the Society for Human Resource Management, in 2017 the replacement costs for digital media advertising can reach as high as 50% – 60% of the employee’s annual salary. But again, if the Great Resignation continues unabated, you may need to factor in a signing bonus.

Efficiency Gains from Outsourcing

There are also efficiency gains to be had with an outsourcing partner. Take Paragon as an example. Our teams currently support 50 brands, publishers, agencies, and platforms with some or all of their ad operations.  And we have expertise with over 150 technology platforms, tools, and solutions.

Thanks to this deep technical platform expertise and broad client list, we can generate a 20% – 30% efficiency gain when we take over AdOps work from a client.

Intangible Benefits of Outsourcing

Finally, there are numerous intangible benefits to outsourcing, beginning with less distraction that stems from high turnover rates. When an ad trafficker quits, other employees need to step in to do that work until a replacement can be found. That’s a heavy burden.

Equally important, when you free up your employees from the mundane, but highly demanding, campaign trafficking work, you can reassign them to more strategic, and personally satisfying roles that promote client satisfaction, grow revenue and strengthen your partner ecosystem.

Refocusing your employees to the more satisfying work is a virtuous cycle of benefits. Turnover is lower, you can keep that earned knowledge in-house instead of losing it to a competitor, and all the costs of recruiting can be put towards acquiring new customers. Get in touch if you like to know more.

Author:David Tyler

Date:3rd May 2022

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The growing importance of CTV

Much has been said about the way COVID-19 drove 10 years of ecommerce growth into just 10 months. But COVID-19 had a significant impact on many aspects of the economy, marketing and advertising included.

Take television advertising. Digital TV viewing shot up, and advertisers strove to meet them there. But rather than make big bets on the annual Upfronts, where marketers purchase huge and costly inventory buys, advertisers turn to programmatic buys of connected TV. The TV landscape will never be the same again.

The pandemic & TV viewing and advertising

Like all trends in digital advertising, the great shift in TV viewing is 100% driven by consumers. They decide when to watch their favorite shows, and on which device to watch them. Gone are the days when people gathered in the family room to watch appointment TV.

That trend went into hyperdrive during the pandemic. With out-of-home options constrained, the 2020 lockdowns prompted consumers to watch a lot more TV. Binge-watching entire seasons of shows became the new national pastime: digital TV viewing minutes shot up by 25% from Q1 to Q2 2020, just as lockdown orders hit..

And, in a very short period of time, the consumers were introduced to a slate of new streaming services: discovery+, Peacock, HBO Max, Paramount+, Apple TV+ and Disney+. Restless consumers added those services to their Netflix, Hulu and Amazon Prime Video subscriptions.

Within the ad-tech industry, we differentiate between linear TV, CTV, streaming and advanced TV. To the consumer, however, it’s all just TV.

Consumers weren’t the only ones who embraced CTV during the pandemic. Advertisers, unsure of where to find their viewers, migrated from linear TV to digital. CTV allowed them to test publishers, often smaller and experimental ones, measure the results, and optimize their media plan on a weekly, or even daily basis. That’s game changing.

Digital = performance campaigns

For a long time, TV was seen exclusively as a brand-awareness channel, one that can reach tens of millions of consumers in a very quick time. The challenge is that one was never quite sure if those ads were seen by the right consumers, or if those consumers took actions as a result of seeing an ad. Put another way, two cornerstones of digital advertising — measurement and attribution — were largely unavailable to TV advertisers.

But CTV obliterates those constraints. In addition to removing the pressure of placing big bets at the Upfronts, all the benefits of digital advertising — testing channels, measuring results and optimizing as spend in real time — now apply to the TV channel. And that, says TVSquared CEO Jo Kinsella, makes CTV a performance channel. There’s data to backup Kinsella’s claim: According to research Hulu and Telaria, 82% of DTC shoppers will take action after seeing an ad streamed across CTV

What’s interesting is the way in which CTV democratizes TV advertising. Smaller companies, like growing DTC brands can now get into the game. Rather than invest millions in a campaign as was once required with Broadcast TV, marketers can test the waters with a much smaller budget.

And they can use their tried and true strategies for that testing. For example, eMarketer reports that about 60% of CTV impressions are purchased via programmatic channels. That’s about $2.37 billion.

Challenges of CTV

Connected TV still faces some challenges, however. To begin, it’s a highly fragmented market. Let’s say I’m a shoe brand and I want to target women aged 25 to 45. In the pre-digital world, I’d turn to Nielsen’s who would tell me which shows or properties will allow me to reach my target audience. Today, my target audience may watch those same shows on a computer via a streaming service like Netflix, Amazon Prime, YouTube, via cable and a Smart TV, or from any one of the affiliates that distribute that show. How do I reach them at scale?

Another challenge is measurement. Sure, digital impressions are countable, but every media buyer uses a third-party measurement company to ensure the number of ads they paid for were actually delivered as promised.

Measurement is more difficult, as TV studios rely on service-side ad insertion (SSAI) for ad delivery. SSAI knits ad spots into the content of the show itself in order to thwart ad-blocking software, which works by blocking ad calls to an ad server. If the ad is integrated into the content, there is no ad call. But it also makes it difficult for advertisers to know if their ads were actually displayed, leading to a new kind of walled gardens.

That challenge is being addressed, however. In fact, over the past few years we’ve seen the rise of multiple TV consortiums that bring together all the major players in the ecosystem to tackle the challenges of CTV. After all, what’s good for the goose is good for the gander, which is why they’re working together to develop a set of standards for buying inventory, measuring campaigns and calculating attribution.

Paragon’s CTV services

We provide a full range of CTV services to clients to ensure ads are displayed correctly and meet your expectations:

  • Precise QA testing of ad creatives to ensure all campaigns meet technical specs, and perform as they should on devices
  • Campaign setup, including troubleshooting campaign delivery issues and providing recommended edits/changes for peak performance
  • Pacing and performance reporting
  • Quality check AVOD channels to ensure the content quality and ad delivery aligns with your legal guidelines and brand standards
  • Partner integration support
  • Exceptional account management

Get in touch

Connected TV is an exciting new channel for advertisers of all sizes. It combines all the benefits of medium – site, sound and motion – with all of the advances of digital. If you haven’t considered adding TV into your media mix before, now is a good time to start. CTV has lowered the barriers of TV advertising, allowing more brands to reach their audience in this highly engaging channel. Paragon can help you launch successful CTV campaigns. Get in touch.

Author:David Tyler

Date:21st February 2022

Blog

5 things to look for when selecting an outsourcing agency

Is your brand thinking about outsourcing your digital campaigns? Good plan. By selecting the right outsourcing partner you can get access to experts in every aspect of digital campaigns, and give your internal teams more time to focus on other work that is client or revenue focused.

Of course, this begs the question: how do you select the “right” partner? Here are five things to look for when selecting an outsourcing partner.

#1: Industry expertise

Launching, optimizing and reporting on campaigns successfully is no easy feat. There are a million details to take care of, all of which require considerable expertise to do properly. Perfection is required every step of the way, from ensuring that all creatives are formatted correctly to the channel in which they’ll be seen and assessing brand safety of ad placements, to execution across multiple direct and programmatic channels.

You need a partner with significant industry expertise, someone you can learn from, and who can step in to fill in unexpected gaps in your internal teams as they arise.

As a premier digital media services agency, Paragon Digital Services teams offer considerable end-to-end campaign expertise. Our teams are well trained and well versed in every aspect of digital campaigns, including media operations, data analytics, creative and campaign optimization, as well as ancillary business finance services to advertisers, publishers and platforms across the globe.

#2: Methodology for learning and documenting your internal processes

Every brand has a unique combination of internal processes, supported by internal infrastructure, that its employees follow in order to work towards common goals. Processes include campaign requirements, sign-off authority, escalation procedures and so on.

You need a partner that has a methodology for supporting your internal way of doing things, and not the other way around, otherwise, you will spend too much time managing your outsourcing partner, rather than reaping the benefits of time saved.

This is why Paragon Digital Services has designed an onboarding system that begins with the creation of a client-specific Standard Operating Procedures document. This document is a comprehensive roadmap of how our two companies will work together. It covers:

  • How, when and why we communicate
  • Which systems and tools you want us to use
  • Services we’ll provide
  • Your priorities
  • Escalation management plan

#3: Certifications

It’s one thing to be trained in a software or process, it’s a whole other matter to complete rigorous certification. Take ensuring quality management and data security. Your outsourcing partner will touch a lot of your sensitive customer data, don’t you think they should be certified to do so properly?

This is why Paragon is fully ISO 9001:2015 certified. Not only that, after four years of audits and certification, Paragon has built a robust infrastructure around the ISO 9001:2015 principles, and it has become a way of life for our organization. All of our workflows – from the simplest task for a client to fulfilling a role they’ve handed off to us – are executed with these quality principles in mind. If you’d like to learn more about our ISO certifications, and what they mean for you, we’d recommend you check out one of our previous blog posts – ‘What is ISO 90001:2015 / ISO 27001 and why should you care?’.

#4: 24/7 campaign support

Campaigns can’t wait for someone to return from vacation or a conference. You need a well-oiled machine that can design, execute and optimize campaigns based on your schedule.

A good outsourcing partner is one who can meet your campaign deadlines, and manage your ongoing ones 24/7 by seamlessly plugging resources when a team member calls in sick or attends a conference. This is why Paragon prioritizes our Standard Operating Procedures document.

There is always somebody looking after your campaigns.

#5: Full advertising support

If you only plan to do one form of advertising, let’s say paid search, outsourcing to an agency with limited skill sets may work for you. But consumers are multi-channel, and that means your advertising strategy will need to meet them wherever they are in the digital universe.

Paragon can support every component of your campaign, from paid search and paid social, to global display and video programmatic campaigns. The benefit of a one-stop shop is that we can analyze your campaign holistically, and inform you when you’ll get better results by concentrating on one channel over another. Plus, it means you have just one point of contact to work with.

Interested in discussing our offerings further? Get in touch.

Author:David Tyler

Date:5th October 2021