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IPG Reorganizes Trading Desk Operations as Company Tries Automation

Change comes as clients across industry start to question model

Regardless, ad tech vendors are starting to build their products to work more nimbly in a future where they have more clients, not just a select few trading desk partners. “Brands aren’t dumb,” said one vendor. “There hasn’t been enough spend to matter. But with this shift to programmatic premium, the money gets real. Clients are going to expect you to act like an agent, not an ad network.”

The bigger question is, has the trading desk model ever worked for agencies? Proponents typically brag about the hundreds or thousands of campaigns they have for clients via their trading desks to date. But one former agency insider threw cold water on those claims.

According to some former agency executives, most global agencies have 500 to 700 clients. So even if a few dozen clients are using a trading desk platform, each running multiple campaigns, that’s a drop in the bucket. "It’s actually been quite hard to get more clients on board,” the insider said.

Why? Trading desks simply don’t pay off for certain clients, who either rely on low-cost cost per acquisition tactics or are very concerned about site environment.

And even for clients that do test trading desks, they’re not always immediately effective. “It takes a long time for an algorithm to learn and an enormous amount of volume needs to be captured," said an insider. "It may take eight to nine months and that’s hard for clients to stomach."

There’s also the cost of technology—never an agency sweet spot. One exec estimated that trading desks can cost $7 million to $10 million just to develop, and constantly need to be maintained. “It’s a sinkhole,” she said.

That cost is a great argument for stand-alone agencies to take over audience buying. Another is simple long-term relevancy. “To me, if agencies don’t start owning the process, they’ll start sending brand agencies to the nursing home,” said one agency exec.

Of course, many dismiss this way of thinking. Operating trading desks requires experts. "They are here to stay," said PubMatic co-founder, CEO Rajeev Goel. "Overall, the model works. And it takes a real expertise and skill."

"There's too much money to be made," said another insider. "Agencies aren't going to give up yet."

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