IPG’s Cadreon Gets A Seat At The Grown-Up Table

ipg-argyilanInterpublic Group has made changes to its Cadreon trading desk in North America, uprooting it from its previous home in the Mediabrands Audience Platform and repotting it in the Magna Global media investment arm.

As Adweek reported earlier this month, a new entity called Magna Global North America will absorb the trading desk along with search agency Reprise. MAP, meanwhile, will carry on primarily outside the US.

MGNA is led by Kristi Argyilan, who says that by aligning Cadreon and Reprise with Magna’s TV, print and radio buying activities, Mediabrands is laying the groundwork for wider automation of media buying, including traditional placements.

As the platforms become more sophisticated and the inventory is available for more traditional media, we start to get to cross-channel, real-time optimization,” she said.

It’s natural to wonder if the change was driven by continued client pushback against desks like Cadreon, WPP’s Xaxis, Omnicom’s Accuen, and Publicis’ VivaKi Audience On Demand. But while those pressures are real (The Kellogg Company and Kimberly-Clark are among the brands that have publicly balked, citing concerns about data security or “black box” bidding algorithms) they do not seem to be in play here. There are a couple reasons why.

First, pushback or no, Cadreon’s global annual revenue is substantial – in the realm of $100 million, a source tells AdExchanger. Last year, Cadreon grew about 28% in North America and 150% internationally. Even if the majority of IPG clients choose not to leverage display ad trading at the holding company level, Cadreon is a growing business that has found some purchase with IPG agencies and their clients.

Second, IPG’s move does not decentralize Cadreon. By porting it to a new P&L under Magna, Mediabrands maintains its “hub” status. Executives say that under Magna Global North America, the trading desk will continue to support Mediabrands agencies such as Universal McCann and Initiative, just as it did under MAP. And it will also remain on the menu for IPG agencies outside Mediabrands, such as Hill Holiday and R/GA.

In short, while it still falls short of estimates for the largest holding company trading desk – WPP-owned Xaxis – the growth at Cadreon suggests clients haven’t categorically rejected the model. Not yet, anyway.

The new structure marks a departure for Magna, which was previously focused on (a) research, and (b) negotiating upfront deals and other media packages by aggregating IPG’s spending clout. It was all about cost efficiency for pre-negotiated campaigns.

The addition of Cadreon and its data-driven approach adds complexity. For instance, Magna Global North America will absorb AMP, a data package Cadreon constructed with Nielsen. How will these new data feeds and the trading desk’s always-on approach to campaigns dovetail with Magna’s history of buying reserve inventory?

AdExchanger spoke with Argyilan about the new organization and Cadreon’s role.

AdExchanger: What is Magna Global North America and how is it different from what Magna Global has offered until now?

KRISTI ARGYILAN: Magna Global North America is a consolidation of some of the most important assets that Mediabrands has been building over the last couple years. Magna Global, historically, has been known for providing the data and insight into making intelligent investment decisions, with a lot of focus on analog media first and foremost. But Magna Global has evolved pretty quickly to keep up with a changing marketplace,  in some ways leading the marketplace in terms of channel-neutral ways of negotiating media partner deals.

What changes are clients requesting from the new Magna organization?

One of the big strategic decisions [Mediabrands CEO] Matt Seiler has been driving is around performance and a focus on business outcomes, being an extension of our clients’ marketing departments. What we have discovered with some of the data packages we’ve been buying is that if you construct the right kind of data views, you can understand how media drives more important metrics around sales.

We’re in a position where we can understand the impact across media and drive more meaningful business metrics that our clients are pushing for. This is born out of the need for marketing clients to identify the value that advertising brings to their companies, so that they’re not just a cost center but an investment that can prove it’s driving incremental business.

That sounds consistent with what we’ve heard from Matt in the past about shifting to performance-driven renumeration. 

That’s right. We talk about pay-for-performance once we’ve proven to the client that we can sign up for this new value conversation. In the past we’ve been about cost. This puts us in a more valuable position with clients.

Can you give an example of how the media planning and buying teams might relate differently to clients?

The most important value proposition for our clients is what happens when you take a platform object like Cadreon and introduce the data packages we have through our AMP product. You’re able to target in completely different ways.

We have respondent-level information that helps us understand how a person goes from one channel to another to a purchase decision. AMP is a data package we originally constructed with Nielsen. Instead of using cookie data, we now know who’s buying what and the path to purchase. It’s the most accurate audience exchange you can find in the industry. Nothing is implied or inferred.

Not only can we understand the relationships between tactics and how they result in a sale, but we can apply that learning across all media. As the platforms become more sophisticated and the inventory available for more traditional media, we get to cross-channel real-time optimization.

That’s the vision. There’s obviously a lot of inventory that needs to make itself available. Today we can do it lots of ways on a very manual basis, but not real-time. It happens over a longer time horizon.

Is client pushback against centralized display buying a factor here?

It wasn’t at the heart of the decision that Matt made when he bought these capabilities together under Magna.

What happens to MAP outside North America? Is there any MAP left in North America?

There’s still a MAP product management stack, which is product management and technology. That’s absolutely being kept intact so that Cadreon and Reprise and Ansible and Spring Creek, especially outside the US, are still healthy and continuing to grow.

With the trading desk residing within Magna, how will sister agencies at Mediabrands and within the larger IPG organization leverage the display ad trading? I’m thinking of Universal McCann and Initiative within Mediabrands, or R/GA or Hill Holiday outside of Mediabrands.  

First off, Cadreon stays alive and continues to grow. Whatever label you want to place on Cadreon, it continues to move forward, and short-term it will be the individual solution or provider for individual brands.

The vision is that we will eventually have something that can be released to all brands to work from on their own, with a central resource responsible for continuing to iterate it.

Cadreon grew up as a different kind of business. It’s providing some incredibly important learning for us as we figure out what’s the broader platform – I hesitate to use “trading desk” – that all of our integrated investors should be utilizing.

And that’s why we’re in conversations with technology companies and media partners – to understand what developments they have going on. We’re well aware that if we have this great system and we push a button to transmit but there’s no one on the other side to receive, we have failed in our mission.

What about mobile buying?

It’s integrated into everything we do already. We learned pretty quickly from search and social that we should get it integrated into the planning and buying teams quickly. If you wait too long, it becomes too specialized.

We continue to rely on Ansible to help us with strategy and creative, but the planning and buying sit within our team. And that’s across all the brands.

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  1. If you go to Kroger and buy a can of green beans, you don’t demand to know how much Kroger paid for the can, label, beans, marketing, and finally what their profit is. You just accept that’s what the green beans cost and choose to whether or not to buy them. So why is pricing transparency perceived put alongside life, liberty and the pursuit of happiness as a natural right by clients regarding their agencies?

    Because clients are usually locked into contracts with their agencies and can’t buy media elsewhere. If you signed an agreement to only buy your groceries from Kroger, you might start asking questions too.

    Would agencies be willing to eliminate the ATD exclusivity part of their contract in order to retain the trading desk model and its profits? If so, clients could then choose to concurrently try to give it a go on their own or work with independent trading desks to ensure they have the very best partner. If the holding company’s trading desk truly is the best solution, they have nothing to worry about.

    If a holding company offered this up as a sign of confidence in its technology, people, and processes, they might actually grow their trading desk business faster.