This post is by David Angell, General Manager of the fast growing Melbourne market and National Head of Media. David has extensive commercial and media experience gained through a fifteen year career in media agencies, which he uses to help drive optimal results for TrinityP3 clients.
Programmatic media. For a while, the word ‘programmatic’ was an industry buzzword, a sign of things to come. More recently, programmatic trading of digital media has of course gained huge traction.
For many advertisers, the programmatic function is completely or partly run by a programmatic trading team (or ‘Agency Trading Desk’) operating as part of an overall media agency arrangement.
Various data sources forecast continued double digit year on year growth of digital media expenditure, with programmatically traded media accounting for at least 40-50% of those dollars.
And it’s not just traditional digital; programmatically traded outdoor, and now TV, continue to build momentum with big things predicted for the future.
So, programmatic media trading certainly can’t be ignored, given that an ever-increasing amount of marketing dollars are being channeled this way by agencies.
Ever increasing amounts of marketing dollars require a greater level of scrutiny on the part of the marketer, to ensure best practice servicing, operation, fee structure and outcomes.
Which begs the question; should marketers consider pitching programmatic trading desk functions as a separate entity?
Lack of understanding can be a block
There are of course many reasons not to take a pitching route, most if not all of which will be familiar.
It costs money to pitch, in the form of resource and time.
Pitching can cause stress, both internal and external.
It can damage day to day operations, temporarily affecting campaign results.
And, of course, in the event of a new supplier winning a pitch, the marketer is required to take on and manage another agency relationship, which can result in supplier resource double up and roster relationship fracture lines.
But there is one over-riding reason for not pitching – or perhaps, the reason why the majority of marketers choose not to.
A lack of confidence, grown by lack of understanding.
The ‘Transparency’ debate has raised more questions than answers
In the time since Darren Woolley called out the issues around media transparency and the lack of industry response, we have naturally had numerous interesting discussions with advertisers.
These discussions were often off-record, not part of any project as such, and primarily focused on trying to unpick the programmatic landscape.
It was surprising that many did not really see the options available to them when it comes to programmatic media buying.
Some even made commentary to the effect that ‘I know I’m pouring money into programmatic, but I’m not really sure where it all goes.’
But on reflection, is it actually that surprising? Marketers generally have a lot more to do in their day jobs than reflect on the technicalities of media buying. There is a general lack of in-house expertise in this area, which makes marketers far more reliant on their incumbent agency than they would be in more traditional areas.
And herein, unfortunately, can lie the problem.
The holding company ‘fait accompli’
It is interesting that the majority of marketers will often be using the programmatic trading desk that is owned by their media agency holding company or group.
This is usually because the media agency is the one that initiates the discussion on programmatic trading and then, naturally and understandably, recommends their sister company. It is the core strategy of all holding company agencies, and it is good business.
But even then, marketers, in our experience, often do not see with full clarity that programmatic buying does not necessarily have to be linked to the media agency they use.
The major holding companies have separated and consolidated their investment into programmatic trading instead of building it into their existing media agency brands; yet, because it has been presented to them almost as a fait accompli by the media agency, sometimes the idea of having a choice in the matter does not occur.
When agreements are simply forgotten
When trying to understand the lack of understanding (so to speak), we also find that out-of-date contracts have a lot to answer for.
Advertisers (or their predecessors) will have in some way authorised their agency to use its programmatic trading function a long way back, when programmatic trading was far less developed – and, it has to be said, there was a lot less choice in the market, another valid reason for simply sticking with the media agency offering.
Since that time, the agreement has been in a drawer, forgotten.
And ‘forgotten’ is not too strong a term. Our discussions suggest that while some marketers and their organisations question the value of programmatic trading, it is interesting to find that their media agency may be using it anyway, without advertiser awareness.
In one case an advertiser with a significant advertising investment in one specific digital network was shocked to find out that the same advertising was being traded programmatically by their media agency.
This is despite the fact that the company had made a global decision not to place any of their investment through a programmatic trading desk.
But the fact is that some media inventory is most effectively placed this way, so the media agency had decided to take a programmatic approach.
In this example, the problem is not just lack of awareness in terms of trading methodology. Nor is it only about internal compliance.
The problem is also monetary, and it is contractual.
The media agency was placing the inventory through their holding company owned trading desk – essentially a third party.
Whilst it is highly likely that the marketer would have, at some point, signed a one page contract addendum giving authorisation to the agency, our discussions with the marketer demonstrated that, in this case, he was also unaware of the commercial arrangement in place between the media agency and the programmatic trading desk – which has implications for media cost, agency fee, and use of first and third party data, amongst other things.
Why would you want to pitch for a programmatic trading desk?
The lesson here is that, generally speaking, it is not just enough to determine if you require programmatic trading; you almost certainly do. You need to determine whether or not you are already using it without being aware; and you need to understand if the service you’re using is right for you.
There are more choices than your media agency would have you think
Let me say here that I am not advocating sudden and wholesale pitching of trading desks.
I am also not suggesting that running with the media agency offering presented to you is by default the wrong choice; also, generally speaking, using your media agency’s desk is not without its advantages.
If you’re utilising a large holding company offering, there will certainly be economies of scale involved (although you could of course gain the same advantage by moving to an alternative holding group just for programmatic needs).
There will be quality advantages gained through the rigour with which large operations select DSP partners, and strike inventory deals.
There are safety benefits; large organisations generally invest a lot of money and effort into fraud prevention and verification.
There are measurement benefits, particularly regarding recent efforts in viewability measurement – again, this requires resource and investment on the part of your media agency holding company.
Finally, there are of course efficiency and effectiveness gains where your media agency team has a better chance of seamlessly integrating with a trading desk partner often working in the same building. It is worth noting that a number of agency groups have started bringing programmatic trading desks structurally closer to agency digital and account teams.
But – there is choice, and a lot of it, in the market, both from rival holding companies and from independents. So whilst you may have all of these benefits from staying where you are – it becomes more a simple question of understanding how your current service provider actually stacks up.
In a recent discussion with an advertiser regarding their media and channel management agencies we raised the subject of reviewing not just their search, social and display and traditional media but also that they should consider their programmatic trading provider, which to date was provided by the media agency holding company.
When we were able to provide them with a view of the market place they were genuinely surprised at the number of programmatic trading providers both independent and provided within the major holding companies.
The interesting part was that by defining their specific requirements of programmatic trading they were able to best match the various providers in the market place to their needs.
Ultimately, it resulted in the realisation that the trading desk that the media agency had bought to the arrangement was the least suited to their needs.
Better to have a direct relationship with your trading desk
I’ve already spoken about the potential downside of ‘yet another supplier relationship to manage.’ But in the right circumstances (level of investment and strategic intent being two key indicators), the direct relationship with a programmatic trading desk has significant advantages:
- The contract directly with the programmatic provider means that the terms and conditions are enforceable, or at least more enforceable than if the arrangement is third party or subcontractor to your primary contract with your media agency.
- Sharing your 1st party data and sourcing and including 3rd party data is easier and provides greater rigour to the process to ensure your data stays secure.
- Better opportunities for entering into performance or result based remuneration directly with the programmatic provider, rather than through your media agency.
- Increased flexibility in accessing a wider range of inventory and premium inventory with many independent programmatic providers accessing not just trading desks and publishers directly but also trading through other holding company desks.
- And if it all goes south with your media agency or your programmatic provider you don’t have to change everything, just the components that are underperforming, thereby minimising disruption.
If your investment warrants it then you should at least consider your options
So when should you consider adding a programmatic desk to your roster of media suppliers rather than simply going with the one your media agency sells in?
Assuming that you’ve answered the basic question about whether or not you need the services of a programmatic trading desk, it’s worth considering the following:
- How much are you currently investing in programmatic?
- How is this investment likely to change over time?
- What are your specific objectives and strategic requirements?
- Are your current arrangements delivering the results you need?
- Is your customer data being used and is it secure?
- Do you have access to the publisher data collected by the trading desk?
Given the growth of programmatic is not likely to slow any time soon, the chances are that your answers to these questions probably raises some kind of case for review.
If pitching is not yet the answer for you, then there are questions you can ask your existing or prospective supplier – neatly encapsulated in this post on our blog. This is one of a number of posts, podcasts and videos on the subject – just visit the blog and take a look.
Whatever you decide, I advise you to make sure that, before you do anything, you ensure that you have the necessary skillsets to run a pitch in this technical area, and also consider your own team’s skillsets longer term, to ensure that as a marketing operation, you’re able take full and informed advantage of what a programmatic trading desk can offer.
TrinityP3’s Media Transparency, Performance and Value Assessment takes a holistic look at the operation of your media agency, assessing against best practice at every stage of the journey. It aims to give you the tools to improve the output of your media agency.
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