How The Trade Desk went from media agency BFF to frenemy
The Trade Desk was once seen by agencies as the helpful, friendly alternative to the might and heft of Google when buying inventory programmatically. Seems those happy days have faded in recent months, as several media agencies complain the ad-tech firm has become less transparent, more expensive to use — and perhaps so big that they have begun to fear it.
Why fear it? Because The Trade Desk has made efforts over the last year to generate a closer and more direct relationship with brands — media agencies’ clients. But also because, besides seeking out negotiating clout on their own, there’s not much media agencies can do since The Trade Desk has become such an important part of programmatic buying and selling of inventory.
None of the media agencies or analysts Digiday reached for this story would speak for attribution, due to continued existing relationships with The Trade Desk (TTD).
A TTD representative refuted the agencies’ complaints, saying the firm has done nothing different in the last year that would provoke them — and added that no agencies have voiced complaints about these issues.
“Our agency partners are our closest allies in the transformation of the media business to a more data-driven ecosystem built on trust, transparency, and objectivity within the open internet,” said the representative.
For many agency traders, TTD’s concentration of power is both from a business perspective, because it performed more consistently than, and grew steadily relative, to other vendors, but also because it did a solid job early on of positioning itself as the anti-Google (whose DV360 is a rival to TTD) and a champion of the open web.
Now the tables are almost turned, not only because agencies point to poorer customer service assistance from TTD, but improved customer service from Google. That latter development may have more to do with Google experiencing its first-ever revenue downturn in 2022, which has perhaps necessitated a kinder and friendlier approach to agencies and clients. Still, the end result, to media agencies, is that TTD comes across as less helpful than it used to be.
So what are the complaints?
Direct outreach to clients around agencies
All the agencies reached for this story agreed TTD is approaching clients more directly. One pointed to The Trade Desk’s increasingly close relationship with Walmart as a direct threat.
In February 2022, TTD launched OpenPath, which worked with a number of publishers to provide advertisers with direct access to their inventory. Agencies are grumbling this effectively cuts them out of the buy-sell equation. (Although one agency exec noted TTD’s move hurts other programmatic vendors more than it hurts agencies.)
TTD sees it quite differently. “To help our agency clients drive objective value in digital advertising, The Trade Desk has long pioneered and championed supply chain improvements that increase transparency, most recently with the launch of OpenPath,” responded TTD’s rep. “As a result, the relationships and alignment on the buy-side that we have with our agency clients have never been stronger.”
One agency exec said TTD completely changed how they charge for data, shifting from a CPM fee to a percentage of media fee. Another agency corroborated that, saying that fees for data that’s essential to making investments smart, valuable and effective end up costing considerably more than they used to, as much as double the cost of other (non-Google) DSPs.
A third exec expressed frustration TTD charges “a significant amount of fees” in order to use its UID 2.0 solution (TTD’s proposed post-cookie identifier solution), and doesn’t leave room for negotiation — they’re simply put forth as take it or leave it. (TTD’s rep responded that there are no fees for UID 2.0 and that it’s open-sourced.)
TTD responds that the take rate for fees has actually stayed the same at around 20% over the last eight years, at 21.1% in 2014, and fluctuating slightly up and down in ensuing years and most recently at 19.4% in 2022.
Increasing opacity in its products/services
One programmatic expert at an agency noted that TTD is apparently not participating in a Google-led program that aims to bring more transparency to the DSP process — called “Confirming Gross Revenue.” The expert did acknowledge that Google and TTD are direct competitors in the DSP space, but still felt that not participating equated to having something to hide.
“We’ve built our platform to enable our clients to apply data that make their digital ad buys precise and transparent,” said TTD’s rep.
In the end, it will most likely come down to size and negotiation. If your holding company is big enough, you will likely be able to negotiate on the fees. The smaller the agency, the less wiggle room it will have to cut deals. But the whole idea of programmatic is that it’s non-guaranteed, noted one agency exec, so locking in pricing defeats the purpose.
But it’s possible that other DSPs and programmatic vendors will have the chance to gain a little ground here, said one analyst observing the tension between the two sides. Some agencies are designed to work around a programmatic workflow, and that will mean having to either work with what TTD offers — or try to find it elsewhere.
One agency executive at a programmatic specialty shop disagreed with most of the other agencies’ arguments, chalking up the sentiments to resentment about clout. “Whether it’s The Trade Desk or Google or Amazon, people tend to not like it when platforms become very powerful,” said the exec “Nobody likes losing leverage.”
The exec did acknowledge that all DSPs, not just TTD, need to reconsider the amount of fees applied to larger guaranteed campaigns that don’t involve retargeting, frequency capping or other work DSPs do.
“I kinda could get comfortable with paying 20% of my media budget through a DSP for that retargeting campaign, but I’m not at all comfortable paying 20% of my TV budget to a DSP that’s just a workflow tool,” said the exec.
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