I've had the pieces of this blog post written on scraps of paper over the past month. But Mike Shields' post in Digiday this week ("The Trouble With Trading Desks") inspired me to pull them all together. In 2,400 words, Mike did a service for the entire ecosystem by giving very public voice to what had heretofore only been whispered. For those who haven't taken the time to read it, a quick synopsis:
(1) While logical in theory, the so-called Agency Trading Desks (ATDs) are subject to serious conflicts of interest; (2) clients are getting concerned that they are being asked to pay twice -- once to planning, once to the ATD -- for the same plan; (3) it's being said that some holding companies are mandating that planning teams funnel business through ATDs (and away from ad networks -- a point validated by agency buyers in comments posted to the article); (4) all leading to the conclusion that ATDs are in practice using client dollars to fix the agency's own margin problem.
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- Ad Networks are being told by planners that they are not allowed to do business with one another; they are then sent into the cattle chute to the ATD, where baseline prices are dictated.
- Sellers go through a lengthy period of planning and negotiating a program with the planning team, only to have their deal cut by 50% or more by some unseen higher up at the agency or holding company, with the difference being funneled to the ATD or some vendor designated with preferred status.
- The agency can not truly be an agent for the client's brand if it has its own separate profit center -- the ATD -- on the field as a competitor.
- If the acumen and technologies are real -- and if they do indeed generate better results for the brands -- then ATDs should be competing on the open market. The impression of corporate nepotism will remain until they are completely sold off and spun out.
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