The future of agency trading desks: Evolve or die

Digiday first reported about “trouble on the horizon” for agency trading desks in 2012. Now, it seems, that horizon has been reached: Clients have increasingly moved media buying in-house, seeking lower costs, transparency and control. Media goliaths like Google have also threatened the model with a wider offering of products and analytics.

Like successful search companies of the past, trading desks must evolve or face extinction. When ad tech tides start to turn, young companies are often faced with one of two options: consolidation or a disappearing act. Whether this is the categorical direction of the industry, we cannot say — but things are certainly changing.

Digiday checked in with the industry’s largest holding companies — Publicis Groupe, WPP and Omnicom — to gauge their opinions on the future of agency trading desks.

VivaKi, Publicis Groupe
The first to buck the traditional trading desk model was Publicis Groupe, which announced in January it would be merging VivaKi into the company’s agencies. The client-service portion of its programmatic business — including account management and analytics — has ceased to exist independently, while the data and technology pieces have been spun into the VivaKi Operating System.

“It was a natural step for us,” explained Marco Bertozzi, president of global clients at VivaKi. “But we didn’t want our agencies to start from scratch in terms of the infrastructure for programmatic. That’s why those [data and tech] teams remain aggregated: so that VivaKi can continue to serve as a centralized point of expertise on that topic.”

For example, without specifying which one, Bertozzi referenced a piece of ad tech that was introduced to the marketplace this year. While initially agencies had a positive reaction, the programmatic experts at VivaKi were able to spot red flags. Their experience with programmatic platforms enabled them to ask the right questions — and saved the Groupe from months of headaches.

And since many Publicis agencies have their own technology ventures, Bertozzi argues that the company has found a perfect balance: consolidate programmatic client services, but keep VivaKi as the company’s epicenter for technology relating to the topic.

“This is a marketplace that has changed at such a rapid pace over the last three years — and what business doesn’t have to change and evolve according to the industry around them?” said Bertozzi.

“Clients don’t trust the concept of a trading desk anymore. And although it’s early days, we’ve had two or three clients — whose names I won’t mention — that have already given us good feedback. The general sentiment is that this was definitely the right move. It’s going to be quite a tough argument for another agency to go up against in this current climate.”

Xaxis, WPP
Unlike Publicis Groupe, WPP chose not to consolidate its programmatic arm — Xaxis — the primary reason being that it doesn’t consider Xaxis a trading desk.

“We are absolutely not a trading desk,” said Brian Gleason, CEO of Xaxis Americas. “We’re a programmatic media company. And we’re unique because we can be accessed three different ways: through an exchange, our direct business channel or our managed service offering — which is the closest thing we have to a trading desk.”

Direct business at Xaxis means working with clients outside of GroupM. Whereas VivaKi has only worked with existing Publicis clients, Xaxis is allowed roam free.

“We started our direct business two and a half years ago,” Gleason explained. “And it is now our fastest growing line of revenue: 25 percent of our direct business actually comes from outside of GroupM.”

Another important indicator of Xaxis’ sheer independence is that they have no financial commitments with GroupM agencies. So when asked whether he ever envisioned a scenario in which Xaxis would be consolidated, Gleason was emphatic.

“We have a completely different model than the other holding companies,” he said. “We always have been and always will be a distinct entity.”

Accuen, Omnicom Media Group
Although the Accuen model is akin to a trading desk, Omnicom does not consider it to be one as it has set up its structure uniquely and chosen to keep its programmatic unit independent.

Although it is an independent company, the “teams already sit alongside our media agency teams across our office locations,” explained Steve Katelman, evp global partnerships for Omnicom Media Group. “Because many clients want their programmatic resources to be connected to their holistic media strategy.”

But don’t expect Accuen employees to be moved onto the agencies’ payroll.

“Some clients prefer to have their programmatic effort operate more independently with a different set of KPIs,” Katelman explained. “And there are still some programmatic customers who aren’t clients of our media agencies. The point is we need to provide programmatic services in whatever structure meets the needs of our clients.”

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