How decentralizing trade desks created a new set of problems

Programmatic has placed holding companies in a “damned if you do, damned if you don’t” situation.

Although the decentralization of trading desks by holding companies may have reduced opaque fees and increased transparency, it has also created new problems. Sources told Digiday that since the decentralization of trading desks, buyers in charge of large automated buys are now more likely to be inexperienced with programmatic — especially troublesome in that holding companies have experienced an exodus of programmatic talent.

“It’s a classic organization problem where you solve one problem but you create another,” said Todd Sawicki, CEO of programmatic platform Zemanta.

For years, brands complained to their agencies about the obfuscation and fees of trading desks. So to lower costs and improve transparency with clients, several holding companies decentralized their programmatic buyers by axing their trading desks and spreading their programmatic people across individual agencies.

Michael Collins, CEO of demand-side platform Adelphic, anticipated a drop-off in programmatic experience among buyers after the decline of central trading desks.

“But the speed at which it happened in some places caught us off guard,” he said.

Several sources said that an expertise of programmatic has not yet been developed at the individual agencies. Todd Garland, CEO of digital ad network BuySellAds, added that as programmatic buyers got spread out, it became evident that agencies haven’t invested in hiring people with programmatic experience. This problem has been amplified by a flight of programmatic talent whenever holding companies have dismantled their desks, he said.

“The challenge is that we have to engage and educate a whole new set [of buyers],” said Kevin McElroy, vp of sales at targeting firm Grapeshot.

Most of the major holding companies did not comply with interview requests for this story. But Karyn Johnson, president of programmatic investment at Publicis Media Exchange, claimed that her group had merely experienced “normal attrition” since it decentralized its trade desk and that the company responded by hiring people from ad tech firms and training up existing employees who showed high aptitude with data analysis.

“Client reaction [to decentralization] has been positive,” she said. “We’re seeing it in terms of strategy that clients have a bigger say in what technology they use. … One of the benefits was having [programmatic buyers] be a part of the [agency’s] strategy, and being able to launch campaigns faster and more holistically.”

Johnson’s comment alludes to a talking point that has floated around since trading desks have existed, which is that they clash with collaboration since trade desks place programmatic buyers in silos. There may be merit to that claim, but spreading people out can lead to a new set of cultural grievances.

“As programmatic buyers get separated, they start to lose their ability to learn from one another,” said Scott Neslund, evp of client services at ad software developer Centro. “They only know programmatic buying for the account they are assigned, so you start to see a decrease in capability.”

Although the abolishment of trading desks has created a new set of complaints, a few sources said that the integrating of programmatic buyers into individual agencies will still ultimately benefit agencies and their clients. But even sources bullish on the decentralization of trade desks, such as publisher and tech consultant Matt Prohaska, noted that “we are seeing a bit of interim pain.”

Rick Greenberg, CEO of Kepler Group, an agency spun out of MediaMath that emphasizes programmatic, said that if holding companies are going to have success with spreading programmatic buyers out, then they need to change their hiring and training strategies. Rather than focusing on people with the negotiating and sales skills that traditional media requires, holding companies should also target people with tech and analytics skills. And they should also give their buyers frequent and up-to-date programmatic training, he said.

Centro’s Neslund believes that the decentralization has been a positive development for agencies and transparency, but he also acknowledged that the tradeoffs aren’t minimal.

“The risk is you can dilute your expertise too much,” he said. “And in this business, if you don’t keep up with the changes, there is a lot of risk of being left behind.”

Image via Creative Commons

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