A progenitor of the agency trading desk concept and key advocate for programmatic buying within the agency world is leaving his multifaceted role at MDC Partners.
For the past six years, Darren Herman’s business cards have carried titles including chief digital media officer at MDC media agency The Media Kitchen; CDMO at Kirshenbaum Bond Senecal + Partners; managing director at venture capital unit kbs+ Ventures; and president of trading desk Varick Media Management.
MDC said in a recent earnings disclosure that Varick has helped drive digital margins into the upper 20% range. But he said it’s still a tiny percentage of overall spend and so is unlikely to have a material near-term impact on the company’s bottom line.
Herman is moving on to a new role at an unspecified technology company. “I spent the last six years teaching marketers how to adopt technology. And I want to spend the next years teaching technology folks to adopt advertising,” he said.
Herman spoke with AdExchanger about the timing, and the future of agency venture capital (VC) and trading desks.
AdExchanger: Why now? And what’s next?
DARREN HERMAN: What we’re doing here is amazing. For me it’s sort of just time. From a personal perspective, I wanted truly global operational experience. And I wanted to run something. I spent the last six years teaching marketers how to adopt technology. And I want to spend the next years teaching technology folks to adopt advertising.
I’m going to join the executive team at a company. It’s not going to be one of the companies closest to the programmatic space. I will confirm I am not going to a DSP. I think we play at a much broader level.
Both.
What is the future of agency VC?
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I’m long on agencies as investors. Agencies themselves are looking to diversify their revenue and their information streams. When you’re participating in these businesses, you’re getting information that’s not available to the marketplace.
That’s bottom up. Top down would be: Venture capital is fundamentally changing. Just being able to write a check doesn’t get you far these days.
In the future, funds with significant returns will be the ones that can help [portfolio companies] accelerate well. That’s not necessarily an agency VC, but … I think agencies as VCs is an opportunity.
The problem is there’s not a lot of VC mentality within agencies. Even though you’re a CFO within an agency doesn’t mean you’re a good venture investor. Agencies have to attract the right people with the right pedigree. That’s where things get tripped up.
Another thing, we’re restricted by the cash on hand or the debt we have access to. We don’t technically raise funds. If we could raise funds, that would be interesting.
What about the future of trading desks?
We’re going into the next evolution. We’re in this phase where, holy shit, we’re actually doing something now. We had a hypothesis, we tested the hypothesis, people got their wrists slapped — and then one day you wake up and have a big business.
It’s the technological adoption of Madison Avenue. The trading desks have been at the forefront of implementation and execution of technological adoption.
Everyone’s going to do it differently but the questions are: Do they live independently? Is it one desk for the agency? Is it one desk for the client? There are all different models rolling out.
The second part is, how do we scale? It’s less Wild West and more buttoning down and operating it like a true business. There’s a lot of venture-backed businesses in the LUMA scape that are not businesses. They were created to be sold. If those venture dollars go away, they’re up a creek. There’s a lot of M&A opportunity.
So trading desks should start buying ad tech for cheap?
I think the desks and holding companies will be strategic buyers. I think the best thing WPP can do is, instead of buying IPG, go buy Acxiom. I just think it’s a smarter move.
