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Will The Real Agency Trading Desk Please Stand Up?

  |  November 12, 2013   |  Comments   |  

With increasing popularity for using trading desks in Asia, advertisers should start examining closely how it works and whether you should consider going direct with DSPs or not.

Have you ever questioned your agencies for the merit of charging more for using their Trading Desks? Are you actually double paying your agencies to manage media and then paying again for the agency-acquired services of a trading desk? With the increasing popularity of using trading desks in Asia Pacific, advertisers should start examining closer to how trading desks work and whether they should consider going direct with DSPs (demand-side platforms) or not. One of the greatest starting points is to read the whitepaper published by the Association of National Advertisers in the U.S., highlighting the pros and cons of using Agency Trading Desks.

The push from media agencies in Asia Pacific to replace traditional premium display buy with more targeted audience-buy via their trading desks signifies the changing dynamic of online display buy. IAB U.K. has published a great video showing the evolution of online display buying, from direct publishers to the rise of ad networks and DSPs in the past decade to the use of trading desks in recent years.

RTB (real-time biddable) display inventory via DSPs and trading desks deserves its recognition. It transforms the traditional mindset of selecting relevant publishers, hoping to reach an advertiser’s target audience, to a much more cost-effective way of directly buying the audience, with lesser control in terms of sites that ads will be shown. If executed correctly, advertisers would be able to see an increase in media efficiency through improvements across all KPIs (key performance indicator) such as CPC (cost-per-click), CPL (cost-per-lead), and ROAS (return on advertising spend).

Many agencies also use this opportunity to either mark up the actual media cost that they obtain from DSPs buy acting as both sellers and buyers, or charge additional fees for the trading desk management. Some agencies have invested in an actual Trading Desk Platform, with actual technology behind to connect to multiple ad exchanges, essentially developing a DSP of its own. Their platforms operate by taking in third-party data from various DMPs (data management platform), coupling with multiple ad exchanges to allow precise RTB on selected targeted audience. These technology-backed trading desks have an overhead cost to manage their own platforms and systems, which merit the additional agency fees. Advertisers using this type of trading desks will see additional benefits compared to buying directly from a single DSP.

Unfortunately, some agencies also misuse this opportunity and charge additional fees (through a hidden markup) for using their trading desks, which in reality, only consist of a group of digital executives, running campaigns through various DSP platforms. Under this scenario, trading desk is nearly identical to buying ads through premium publishers or ad networks, which does not warrant additional fees. The additional fees being charged under the disguise of trading desk is frequently seen in the industry around the world. Some of the clients have taken charge of this by building their own trading desks or working directly with DSPs.

One of the biggest myths advertisers have is that they cannot tap into RTB without using agency’s trading desks. In reality, advertisers can buy directly through various DSPs such as Turn, Brandscreen, and DoubleClick Bid Manager, without the need of using the agency’s trading desks. Each DSP has a relatively sophisticated platform to allow you to run remarketing, predictive, as well as audience targeting campaigns. They usually have very solid account management teams that will help guide advertisers through the campaign setup and optimization processes.

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To reap the actual benefits of using RTB for audience buying, I challenge you to ask your agencies to run comparative campaigns through their trading desks and various DSPs separately. Compare the performance against one another by taking the agency fees into consideration. You will then be able to see whether the trading desk actually warrants the additional fees.

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ABOUT THE AUTHOR

Antony Yiu

Previously serving as the Managing Director for iProspect Hong Kong and Key Clients, iProspect Asia Pacific, Antony's search experience includes Google and Internet start-ups in the U.S. His experience spans a variety of functions including search engine marketing and optimization, digital media buying and planning, email campaign management, and market research in both academic and commercial settings. Antony began his digital career while working for Google in its Mountain View headquarters, before moving to a number of startups including oDesk and AdBrite. Antony has a wealth of experience working with multinational companies in finance, travel and hospitality, cosmetics, B2B, consumer electronics, and luxury fashion clients throughout his career. He’s recognized as a leading expert in the field of search and is frequently quoted in the media regarding digital and search engine development in Asia Pacific. Antony is also a frequent speaker at industry conferences around the region. Connect with Antony on Google+ or email yiu.antony@gmail.com.

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