Transparency and Agency Trading Desks

March 22, 2013

By Bill Duggan, Group EVP, ANA

This week’s Advertising Age features a terrific article by Alexandra Bruell reporting on a panel discussion at the recent 4A’s Transformation Conference.  The panel featured six media agency heads and a contentious debate on agency trading desks.  ANA agrees that there are indeed transparency concerns with agency trading desks. 

In late 2011, ANA released a white paper titled,"Agency Trading Desks: Basics Marketers Need to Know & Questions to Ask."  Its purpose is to help educate ANA members on agency trading desks including what they are, what they do, potential benefits, questions to ask, and more.  

Most importantly, the paper advises marketers to be educated on how their company's money is being spent. Every holding company (and independent) does things a little bit differently, so if working with a trading desk, marketers need to understand their agency's model and make sure they are comfortable with it. The following questions and action steps are important.

  • Have a conversation with your agency and understand if a trading desk is being used for your business. Comment to agencies - the use of a trading desk should be clear and transparent with a client and discussed with a client before a trading desk is engaged. Agencies need to initiate discussions re: the value proposition of the trading desk and its compensation.
  • Understand the business model of your trading desk. Ask your trading desk, "How do you make money? What are the costs for service? Costs for technology? Costs for data?" Determine whether or not the trading desk marks-up the cost of media.
  • Understand which media is purchased via a trading desk. The agency trading desk model was initially trialed on display but is also now actively buying online video, mobile, social media, and search (plus digital out of home and addressable television in very limited instances).
  • Be clear on metrics. Those could include cost per lead, cost per acquisition, ROI on sales, or some other quantitative metric. Understand how the performance of the trading desk compares with previous buys not executed via a trading desk.
  • Ask if there are mandates, real or implied, for your agency to use its holding company's agency trading desk. An alternative would be for your agency or you to work directly with a DSP.
  • While there may not be competitive issues within your media agency, remember that the trading desk can work on behalf of all the media agencies within the holding company. Understand how the trading desk addresses competitive conflicts. Ask how pricing is handled in an instance when two competitors are vying for the same inventory, "first rights" for premium inventory, and about the existence of firewalls.

While agency trading desks could indeed offer many benefits, marketers need to be educated on how their compa­ny’s money is being spent and take responsibility for understanding the pricing model, unique role, and value their agency trading desk provides.

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