Agency Trading Desks: Advertisers Speak Out – Brian Jacobs

It is unusual for individual advertisers to contribute to media industry debate. When they do, their comments are generally made anonymously and via their trade bodies: organizations like the ISBA in the UK, the ANA in the US and the WFA globally. Furthermore, those engaging via the trade bodies tend to be few in number and drawn from a small pool of engaged and well-informed practitioners. So the recent announcement from the WFA (World Federation of Advertisers) on digital trading quoting several prominent advertisers is certainly worthy of note.

The WFA has done what trade bodies should do – it has issued a set of guidelines prepared by those with specialist knowledge to help the broad membership. The specific this time is how to make the most of programmatic trading. Further, these guidelines aren’t the result of one or two evangelists banging a particular drum; they emerge from research on what a broad sample of advertisers think about digital trading.

The headline is that advertisers see great merit in programmatic trading, but they don’t like the way the cash flows around the ecosystem. Furthermore, they increasingly don’t trust the major agency trading desks to act in their (the advertisers’) best interests.

The bald facts are that what seems to have become within adtech land an accepted need to keep the legions of middle men in the manner to which they’ve become accustomed, means that of $100 invested by the client, only around $40 finds its way to the end publisher. Factor in fraud, bots, lack of viewability and the rest and that number reduces still further. This so-called technology tax is a bad state of affairs -- and has a great deal to do with the lack of trust so many advertisers feel towards the online business.

As Mark Butterfield, now at the pharmaceutical giant Boehringer Ingelheim and a man who knows a thing or two about the media business says:

“We have little or no clear understanding of what percentage (of digital spend) is being delivered to the media owner and what is being taken in fees from either the agency or middle men. There needs to be clarity in the value chain otherwise clients will continue to question the validity of the digital buy.”

As The Cog Blog has commented before, one might question why the agencies don’t move to help their clients get more from their budgets by streamlining the process. Because they’re in on the scam, that’s why. And when self-interest meets responsibility to the client, it tends to be self-interest that wins.

When it comes to agency trading desks, the WFA study shows that 76% think they’re less transparent than more traditional media trading practices, and although these ATD’s still account for by far the majority of online activity, the percentage of clients using them has fallen from 81% to 69%. Independent trading desks on the other hand have seen their share of advertisers rise from 8% to 30%.

Now there’s light and shade in these numbers, but the trend is clear: Advertisers think online advertising is populated by a lot of people making money and delivering little of value to them, the owners of the budgets; and they feel that their agencies, the people who you think would be the very people to turn to for advice and guidance, are in on the scam.

It seems, as I have said here before, that there is a groundswell of opinion amongst large advertisers that those they still label their “media buyers” are not to be trusted. Those heading agencies would be wise to pause for a moment in their celebrations of smart planning and consider whether attention needs to be paid to their corporate reputations, especially as I suspect most advertisers don’t make the distinction between (say) Carat and Amnet. To the client the responsibility lies with (in this case) Carat.

At the end of the day there is increasingly only really one source of money -- the client. And any business in which the paying customers don’t trust the very people entrusted with their budgets isn’t in a particularly strong position.

Brian Jacobs spent over 35 years in advertising, media and research agencies including spells atLeo Burnett (UK, EMEA, International Media Director), Carat International (Managing Director), Universal McCann (EMEA Director) and Millward Brown (EVP, Global Media). He has worked in the UK, EMEA and globally out of the USA. His experience covers shifts from full-service ad agencies to media agencies; from traditional single-commercial-channel TV to multi-faceted digital channels; and from media planning to multi-disciplinary communication planning. Brian can be reached at brian@bjanda.com.

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