Last week in Cannes, global leaders from the five biggest holding company trading desks convened for a panel discussion hosted by the Rubicon Project. The event took place on a rooftop against the backdrop of the Mediterranean Sea, while on the sidewalk below creatives scurried between beach parties and celeb-packed sessions at the Palais des Festivals. It seems likely that, had they heard the phrases being bandied about high above their heads — phrases like “programmatic direct,” “unbundled data,” and “agency embedding” — their grasp of them would’ve been about equal to their French.
During the hourlong exchange, the five men showed a little more candor about the evolving trading desk model than they (or their predecessors) had in some previous on-stage discussions. (Maybe it was the rose talking.) They got into business metrics and rated countries on programmatic growth/innovation (The big five are USA, Netherlands, UK, France, and Australia) and programmatic difficulty (China).
Recap time!
On the panel were:
– Brian Lesser, CEO, Xaxis
– Kurt Unkel, President, Vivaki AOD
– Dominique Delport, Global MD, Havas (Affiperf)
– Josh Jacobs, Global CEO, Accuen Media
– Michael Brunick, SVP, Programmatic, Magna Global
– Moderator: Jay Sears, GM Revv Buyer, Rubicon Project
Sears kicks off by asking the panelists to introduce themselves, share their global headcount, and characterize growth from 2012 to 2013.
Size And Billings
Brian Lesser says Xaxis has grown to 300 employees and is on track to deliver $400 million in billings this year – up significantly from last year. (WPP started breaking out the unit’s revenue this year.) He won’t give a percentage, but says growth from last year is “phenomenal.”
Dominique Delport notes Havas Media Group is a quite different organization from those of his colleagues, with the trading desk – called Affiperf — fully embedded and running on the same P&L. “We can serve either Havas media entities, or Havas Worldwide entities,” he says. Havas has six hubs in Paris, New York, Miami, Argentina, Singapore, and Dubai. He says growth is “tremendous.” Delport doesn’t mention head count or revenue contribution for trading desk activities.
Josh Jacobs, who runs Accuen globally for Omnicom (OMD/PHD), says Accuen has 200 people around the world. Growth is “global.” Concise!
Kurt Unkel, president of Vivaki AOD, says AOD’s global headcount is now 225 across 21 markets. Last year’s gross media spend was $200 million, and growth this year is 115% “so far.”
Michael Brunick, who recently took the reins at Interpublic Group’s Cadreon when it was placed under the umbrella of Magna Global construct, says the number of employees is 200-plus globally. International is a big push. It is up to 13 official markets and is servicing other countries from those markets.
Questions begin. Sears asks Brunick to elaborate on Cadreon’s earlier stated goal to automate 50% of all media buying by 2016. Brunick responds, “There’s a difference between automation and programmatic. Programmatic is one component of overall automation … We have to focus beyond digital, which is just 20% of our overall spend.”
He adds technology outsourcing is on the table for things like ad ops and trafficking. “The focus this year is maximizing our framework for what we can do in programmatic, and yes, moving a lot of dollars into guaranteed.”
Cutting Publisher Deals
Sears asks Lesser about Xaxis’s strategy to focus on “premium direct,” rather than exchange-traded media. “People confuse the mechanism with which you buy media programmatically with the value that … Xaxis can bring. It’s not necessarily about using a DSP to buy a bunch of inventory from an ad exchange.”
He says that’s a good start but adds, “We want to give our clients an unfair competitive advantage. If all I’m doing with my client is using a DSP to buy auction-based media, then I’m giving my client as much advantage as any other buyer.” Not good enough! Xaxis wants to add a trading advantage by doing exclusive publisher deals and selling that media to clients upfront. He says data is aggregated across advertisers.
Sears asks Jacobs to talk about Accuen’s work on this front. How does that play out with Omnicom’s core media agencies?
“OMD and PHD invest a huge amount in relationships with leading publishers around the world,” he says. “Our buying power does give us a strategic advantage in the market but it’s been separated historically. We’re over on the data side doing smart stuff with a shitty pool of media. They’re over here doing less data-influenced stuff with the best inventory in the world.”
How does Jacobs create the best of both worlds? “We built an analytics platform that ran across everything … We’re looking to say to a client, ‘It’s your decision, [but] we can bring data and decision it better for you than on a publisher-by-publisher campaign basis.'”
That requires strong partnership with the agencies, leading us to…
Embedding The Trading Desk
AOD’s Unkel says, “As we get closer and closer to full on embedding, just having people in the offices, that’s the critical point to work toward.”
Sears drills down on embedding. What’s the split of people in AOD’s offices versus on site at agencies in the Publicis Groupe family? Unkel: “Everyone is based in an office space I pay for.” But! The majority of those staff spend significant time in offices in regional markets.
The other four panelists say they have at least some staff working full time (i.e. fully embedded) at the operating agency level. Jacobs: “One hundred percent of our US business is serviced by people who are sitting in-office at the media agency.”
Big picture: Centralized ad ops, embedded services is the way things are going.
Efficiency Spree
Sears asks Brunick if IPG agencies like UM will have to stop buying certain sites or adopt certain technology. “It’s not that they don’t use technology, it’s that they use too many or they use too many at once,” Brunick said. All those different ad servers, RFP tools, workflow management, and bidding systems add up to waste.
“Digital workflow is a problem,” he says. “A lot of it stems from the nature of digital billing and the reconciliation process, which is obviously unsexy and a big part of how our businesses have to operate in terms of efficiency… It’s being smarter about who we’re working with, how we’re doing it.” It’s all about helping agencies doing more custom, content-driven things.
Desk Margins
Sears notes that holding companies are under pressure in their core media agency business. Boy, do they like those trading desk margins. How do they do that at scale?
Lesser rejects the premise: “I think inherent in your question is that there is some trick in the trading desk that automatically generates higher margins than other parts of the holding company.” Not so! “It’s not like we all sat in a room and came up with a biz model that plays to our advantage.”
The other panelists agree it’s not about the margin but about serving the client while developing new models for the holding company.
Jacobs: “We know how to start new things and add adjacent value to the core mission of the media agency.”
Brunick: “This isn’t about us.”
Unkel: “How do we scale that out and enable the rest of the group to do stuff? Getting to be a product organization, earning on the transaction, that’s the stuff we’re teaching at a broader level.”
Data Co-ops
Lesser: “In Europe there is more openness toward advertisers cooperating with each other.” Non-competitive advertisers, that is. This doesn’t happen much in North America.
Direct To Client
Regarding Xaxis’s direct-to-client business, he says, “Some advertisers just want audiences, and they don’t need the skills and assets that a big media agency can offer.”
These clients tend to be indifferent to technology. “They don’t care how a DMP works, how a DSP works. It’s just, ‘Give me my audience.'”
Unbundled Publisher Data
Sears observes that publishers usually want to bundle data with media. He says, “That’s not always the way you guys want to roll.”
Accuen’s Jacobs jumps in: “Traditionally we bought data & media together… and we’ll take whatever engagement you happen to produce on that site.” But for some publishers, “We value their data more than we value their supply… and the publisher side doesn’t have the tools yet to figure out what they’re really good at and how they can go to market more effectively.”
Lesser: “Publishers … don’t understand that they could likely achieve a higher yield on both of those assets if they broke them apart. Innovative and future-focused publishers are starting to realize that there’s as much of a focus on their data as for their inventory.
Parsing Global Markets
New question: Which country is the most progressive in programmatic in embracing automation? Everyone says the US leads – no surprise there.
Jacobs adds, “We’re seeing a tremendous amount of individual countries that have really vibrant technology systems.” To support innovation Accuen allows local market flexibility. He offers the Netherlands as an innovator. Unkel says France jumps out. Brunick says Australia is “very progressive in adoption and trying new models.”
Sears says, in terms of adoption/innovation, “Our winners are the Netherlands, UK, France, Australia.”
And which is the least progressive? It’s China all around. Jacobs: “Publishers are much more powerful in China.”
Delport says China and India are still the land of feature phones. “It’s still programmatic SMS.”
Sears says Germany has been tough in terms of dealing with the sales houses.
Something New
Finally, Sears commands the panelists, “Tell us something we don’t know.”
Unkel: “You have no idea of the politics we go through here. The fact that we stand here with no equity, no upside to what the other startups do, we clearly have a passion for change.”
Delport: “If we invest as much money in measurement as we do in technology, the shift will be much quicker.”
Brunick: “It’s important for you all to understand the amount of change we undergo on a daily basis.”
Lesser: “Although the technology is very important, the people, process, and methodology with which we build these businesses is much more important than the software we use to trade.”
Jacobs: “In 12 to 18 months you’re going to see an industry that is more complicated, not less. It’s going to be harder to recruit people into these types of businesses.”
That’s a wrap!
