Holding Companies’ Ad Trading Desks Delivering Mixed Results

The great in-house trading desk experiment that the big four agency holding companies—Publicis, WPP, Omnicom, and Interpublic—launched in the last few years appears to have yielded lukewarm results.

In theory, by bringing demand-side platform technology in-house to bid directly on digital inventory and avoid third-party ad networks, the holding companies could offer better prices and service to clients—and help out their own bottom lines. For the most part, though, it hasn’t worked out quite that way—at least not yet. 

In order to make the experiment work, the trading desks had to accomplish two things: first, convince agency clients to sign on; second, get those clients to buy premium space—that elusive quantity known as brand dollars—which is more lucrative than direct response (or cost-per-click) dollars, made up of the ubiquitous, and lower quality, advertising that Web surfers tend to hate.

Out of the big four, Omnicom and IPG have the smallest number of clients. IPG says that at least one of their clients, Microsoft, is a transformative spender.

IPG’s Cadreon has been in this game the longest, setting up shop in 2007. Its present client list, however, tops off at just above 20. CEO Brendan Moorcroft said “the early days were phenomenal,” referring to Cadreon’s first major client that remains a constant: Microsoft. Moorcroft also did not provide numbers for brand vs. DR dollars because, at Cadreon, they “don’t differentiate” – but he did stress the fact that Cadreon’s value is distinct because it does not mark up its media inventory even “by a single dime.”

Like IPG, Omnicon wouldn't  provide details on the breakdown of their business between brand and DR. At least one Accuen client, VolP company Vonage, decided to opt out of the experiment after a brief flirtation.

The Media Innovation Group, WPP’s desk, has more than 85 clients and has not seen any cancellations. At the same time, though, general manager Brian Lesser admits that “the majority” of MIG’s inventory “is still DR.” But, he says, “brand is the fastest growing portion of the business.”

VivaKi Nerve Center, which established Audience on Demand in 2008 as Publicis’ trading desk, has been more successful. Currently, the shop boasts as many as 175 clients.

Its success at wooing brand dollars, too, gives Publicis something to smile about: The majority of the desk’s business—60 percent—is brand dollars, with DR making up the remaining 40 percent.

Kurt Unkel, CEO of Nerve Center, says so far this year, the company has “already done half of what we did in 2010. We’re doubling year over year.”