Alternatives to agency trading desks (ATDs) are ‘growing rapidly’, according to the World Federation of Advertisers (WFA).The WFA carried out a survey of 59 WFA member companies representing 18 industry sectors, which they say represent a total global ad spend in excess of $70 billion.
Independent trading desks (ITDs) – which refers to trading desks that are privately owned and don’t belong to the large agency groups – have seen usage increase by 12 percentage points compared to the programmatic research two years ago, whilst in-house or ‘hybrid’ models, were being used by more than a fifth of respondents in total. The WFA say that these models were being conducted just at the fringes of WFA’s membership two years ago.
Advertisers are also demanding a new kind of relationship that provides significantly improved control and transparency, with nearly 90 percent reviewing and resetting contracts and business models to deliver on these objectives.
Of the advertisers surveyed, all were spending increasing amounts of money programmatically, with an average of 16 percent of their digital budgets being spent via programmatic buying. The largest proportion of programmatic budgets were spent via agency trading desks, which were used by 70 percent of advertisers, whilst independent trading desks (ITDs) were used by almost half of respondents (46 percent).
The WFA says these changes are being driven by the need to secure additional transparency. And progress is being made, as the second generation of programmatic models has seen some improvements, with 29 percent of respondents reporting that they are now satisfied with the level of transparency provided by their ATD, up from 21 percent in 2014. Transparency at ITDs is even better and now satisfies nearly half of users, up from 36 percent in 2014.
The WFA also note that centralised ATDs have pushed spend out to individual media agencies, although 51 percent still work with the WFA call the ‘legacy holding company operations’ such as Xaxis, Accuen and Cadreon. The shift has been driven by client demand to ensure closer working relationships between their day-to-day agency team and the programmatic buying team, to ensure consistency and simpler reporting.
The survey also found that advertisers also broadly reject the idea that agencies should be able to mark up inventory they have acquired in direct deals with media owners before selling it on to brands. Sixty-two percent of respondents disagree with the statement “we have ‘opted-in’ to principal trading and are comfortable with the potential conflicts of interest”. Nine percent agreed.
However, as the WFA noted, this isn’t a straightforward area and there appears to be some confusion on the advertiser side. While 53 percent claimed to have a “disclosed or transparent” programmatic relationship, 33 percent admitted their trading desk model was “non-disclosed/non-transparent”. A similar number – 34 percent – also agreed that there was nothing in current contracts that precluded arbitrage or principal trading. The WFA say many are seeking to clarify their positions in these contracts.
R3, a marketing consultancy, also announced over the weekend that Omnicom were the agency who were picking up the most business in 2016. In 2016, R3 tracked more than 8,000 wins across over 400 agencies globally, and they found that Omnicom added 6.5 percent to its overall revenue through new-business development — worth nearly $1 billion. WPP was relegated to second place, with both Dentsu and MDC returning the next best results as a percent of their 2016 revenue base.