Trading desks, demand-side platforms, data management platforms – I could keep going but I am sure you are probably all fed up with hearing about how these emerging technologies can/are/will (delete as appropriate) ‘revolutionise’ your digital marketing spend. Layer in all the noise surrounding automated, or programmatic, buying of online display ads and you create a perfect storm of misunderstandings and obfuscation – an environment ripe for someone to take advantage of the confusion.
There is no confusion, however, about the way that some trading desks are leveraging programmatic buying to revolutionise the bottom line of the biggest media agencies in the UK. The combination of obscure ownership and “black box” buying is creating market distortions, in both quality and price, and starting to devalue the role of the media agency, particularly within the digital space.
Now that all sounds very dramatic. Some will be dismissive. ‘He would say that’ and ‘It does not happen at our agency, we are 100% transparent’. But the involvement in the buying process of what are effectively in-house trading desks has implications for all media agencies, big and small.
Some savvy clients are already voting with their feet and starting to move their digital media planning & buying in-house or working with independent agencies who offer genuine end-to-end transparency. But for many clients, this is yet another issue to be dealt with that doesn’t appear to be a priority.
I should be glad because as clients start to understand the real cost of using agency-owned trading desks, we will benefit. But I’m worried that in the longer term their smoke-and-mirrors approach will fundamentally change perceptions of all media agencies.
So what’s going on ?
On paper, agency trading desks sound like they give clients a great deal; access to inventory direct from the publishers, bespoke technology, complicated ‘black box’ algorithms, real time optimisation and hyper targeting. However, media agencies could access all of that by using third party platforms such as RocketFuel, Quantcast, MediaIQ or Captify. In fact, some agency trading desks simply white label the aforementioned platforms and pass it off as their own.
The one big thing that agency trading desks fail to offer their clients is transparency. Whilst you may be able to audit your agency, you will never get to audit the trading desks. These have now been reclassified as independent, group functions. Even if you were able to audit, they are now bundling the costs of media, people and tech together to hide the true mark-up. This lack of transparency is not just about the price you pay but also the inventory being bought on clients behalf. There are real similarities with what happened in the financial markets back in 2008, as good (expensive) and bad (cheap) inventory is blended, so no one knows exactly what they are buying. Brand safety rules are still to be applied and even then these are only part of the answer.
The hidden margins of trading desks are also now starting to affect how some media agencies price contracts – using cheap headline rates to lure in clients. Who cares that the media agency does not make any money, when enough cash can be diverted to the trading desk to maintain that group 18% margin?
Its short term thinking and clients are growing suspicious. Meanwhile, digital display is getting a bad reputation, and in some cases performance is dropping, as sites are covered in programmatically traded ads. Brand budgets especially are under-represented online and whilst agencies continue to treat digital media as a way to make a quick buck, that’s not going to change anytime soon. Creative agencies must also find it really frustrating that their smart thinking and work is being crushed by media agencies who just need to keep standard ad inventory pumping though their agency trading desk.
An agency’s job is to represent the best interests of our clients and to offer independent, impartial and expert advice on media channel planning and optimisation. We are also in a great position to help with digital analytics and data management – to truly become a partner for clients and to add commercial value. Agencies need to start working in their client’s best interests and not their own.