Transparency and cost issues drive trading desks in-house

Kimberly-Clark, Telstra, Commonwealth Bank and Foxtel are getting territorial about their data and are building private trading desks, tantamount to internal agency teams, as they look to drive significant cost savings and higher advertising effectiveness, and maintain control over first-party data.  

Certain factors have made it easier for brands to move in this direction. The proliferation of digital channels and technology means that brands can pull massive inventory using highly automated, self-service tools. Where media buying was previously about scale at a lesser cost, today it is about skill, says Dan Robins, OMD Australia’s head of interactive (digital). 

Nervousness and talk surrounding ad fraud, and a lack of transparency, have also prompted some companies to stop outsourcing the business. But it is perhaps the battle for the ownership of customer data that has pushed brands to take charge of media. 

“The industry has done a terrible job of making it a black box,” observes Robins. “Any brand would turn around and say they want it themselves and there are some good success stories. But it’s not right for everybody because agencies can offer some really good advice.” 

Firms using the new formula say there is evidence to show that internal teams are nimbler when it comes to time and energy spent on strategy and implementation. An in-house team, if designed right and deeply woven into a larger organisation from a workflow, process and culture perspective, can add greater advertising effectiveness versus an external agency. 

To be sure, FMCG firm Kimberly-Clark’s approach is not purely in-house. It has opted for a hybrid model where the trading desk is owned by the company but Mindshare, its media partner, runs it. “We feel this is the right choice for us at this time,” says Rahul Asthana, the firm’s regional marketing director. “It enables us to drive faster adoption of the technology without the need to develop media trading capability in-house becoming a barrier to adoption.”

These decisions, Asthana insists, aren’t driven globally but are based on what is needed locally and regionally. “We believe that certain elements such as choice of the technology partners, working with procurement to get the best possible deals and of course the marketing and business challenges are all better defined internally,” he says. 

Hari Shankar, who was PayPal’s head of digital acquisition at the time of the interview, is another proponent of direct relationships with publishers and platforms, especially where sensitive data is concerned. According to Shankar, who joined Havas Media in January as MD of Ecselis APAC and head of paid digital strategy for the group, retaining agency trading desks is a risky proposition because it is often difficult to port data over to brands due to publisher-platform restrictions (as in the case of Google DBM). So PayPal has chosen to keep its platform relationships and deals within the company, while its agency partners “handle the rest”.

Shankar is more flexible with media buys that aren’t necessarily programmatic. “It might still be acceptable to have programs sitting within partner environments (like AdWords) because it isn’t that difficult to have some programs ported over to the brand side when the requirement arises.”

The cost savings at stake is considerable. Shankar reports that brands can easily save 60-70 per cent by having direct relationships with platforms. “I say this because the whole ecosystem works like a food chain, with the SSP machine layer attempting to secure maximised bids, DSP side attempting to secure most efficient inventories and finally trading desks maximising margins that agencies normally secure in addition to charging a service fee for executing campaigns.”

Asthana declined to share specific numbers but did let on that the firm is seeing significant cost optimisations across various programs. “This is giving the business confidence to invest more in programmatic media buying,” he added. 

Still, OMD’s Robins is reluctant to call this the model of the future and says that if brands are going to commit to it long-term, they need to have an always-on approach. 

 “There’s no one-size-fits-all model. Every brand does things differently and a bespoke model could be the answer,” he said. Robins, who is currently working with Qantas and Telstra on a hybrid model, notes that for firms that don’t have the customer-element data piece or do one-off campaigns, tapping into an agency trading desk would prove useful. 

Grace Liau, VivaKi’s APAC GM, admits that while there has been a wave of brands who decided to take things in-house, agencies “still pull the levers”. “Because it is hard work and agencies still want to make money,” she added. “We’re not going to give away these services for free.” 

Asthana’s biggest challenge at the moment is making a business case for taking programmtic in-house. “Right now we’re looking at partnerships to do this better, but as we start spending more of our dollars, the question of whether it makes sense to pay a big management fee to someone external will keep coming up,” he said, adding that the team would be re-evaluating this every 18 months.

For Google’s APAC head of audience solutions, Robbie Hills, in- or out-of-house isn’t the real question. “These are just different ways of reaching the same goal: relevant and useful ads at the scale and speed of the web.”

Our view: Brands are sending a clear signal that agencies have to regain trust or risk losing control over the trading desk.