Traders 0; Ideas 1

14 October 2013

The time has come to ask what is becoming something of an ‘elephant-in-the-room’ question. What business are the media agencies (and more specifically their sibling trading desk partners) in? Are they in the advertising business; or are they in the online trading business? The two are looking increasingly incompatible.

A couple of recent pieces in the American trade titles AdWeek and AdAge have brought the issue into focus. The AdWeek piece, dated September 26^th reported on a panel discussion that took place as part of New York’s Advertising Week and which featured the heads of the largest trading desks. The AdAge piece, dated October 13^th was headlined “Agencies Defend Turf As Ad Tech Moves In On Clients”.

The trading desk heads came across as at best confused (or maybe the reporter was confused, who knows?). Many of them seem to have a fundamental problem deciding whether they’re buyers or sellers (3 out of 5 said they did basically the same thing as ad networks). Furthermore they’re not sure if they even have a future – some think they’ll be spun off, others that they’ll be absorbed within media agencies.

Meantime, no doubt thoroughly enjoying the confusion, “many venture-backed ad-tech companies that originated as agency vendors are increasingly going directly to marketers and offering them cheaper ways to implement their technology”, according to the AdAge report. This raises the issue of exactly what trading desks are for.

Furthermore, AdAge name-checks Procter and Gamble, Kellogg’s, Unilever and Kimberly-Clark as being amongst those who have decided not to use their media agencies’ trading desks.

This is an unholy mess, and it’s going to get a lot worse before it gets better.

I’ve blogged before here on the future of media agencies. For what it’s worth, my view is that agencies have to remember that their core role is to place ads in front of the right people, at the right time, in the right context and at the right price. And then to contribute to the measuring of effect so that they can do more of the right thing and less of the wrong thing next time.

Media agencies have expertise in media planning; they do excellent work understanding how different communication channels work on their own and in combination. Many have proved themselves adept at creative thinking, at idea generation. Much original and valuable research starts with the best media agencies.

Trading desks do none of those things. How many of them even know what the creative is that they’re placing? Most would laugh at any suggestion that they should be aware of such niceties – what counts they would counter is the algorithm and the bidding system.

Well, algorithms don’t have ideas. Bidding systems don’t lead naturally to solutions that surprise and delight consumers, leading them to change behaviour or to go out and pay for something. Furthermore, if I was Procter, Unilever or any other major advertiser generating large quantities of valuable data the last thing I would want to do is to hand the lot over to my media agency; the same media agency I may decide to fire at some future date and with whom I would then no doubt spend months arguing as to who owns which bits of data.

I have the highest regard for Sir Martin Sorrell, but when he proclaimed that we are in the era of the Math Men as opposed to the Mad Men (I  wonder who writes his scripts? Not a mathematician that’s for sure) he seemed to suggest that today maths beats creativity. Without getting into the semantics of how maths can be creative too the point surely is that without brilliant ideas the ad business simply won’t survive.

When asked by AdAge why advertisers needed media agencies when they could easily go direct to the technology vendors, Vivaki’s President, Kurt Unkel said: “If you want to just add more and more partners to the table as a client, at some point someone starts saying, “There’s a lot of complexity here; who’s in charge?”. It would be a shame not to point out the irony in this statement coming as it does from the head of an organisation whose very existence has added a huge slab of complexity to the partner media agencies.

Media agencies need to restate their role, the critical one of working with creatives to ensure that people see, engage and act. Trading desks and all the rest of the data hoopla are there to support this role. They exist to make the advertising more effective, and they shouldn’t forget it.