Digital industry insiders mix it up at Internet Week Europe
The rise of agency trading desks and their potential to disrupt ad networks, exchanges and DSPs has been among the most talked about developments in digital advertising in recent times. But now that trading desks have proliferated and become a part of the fabric of the advertising landscape, the question has become more one of if (and if so, how) they can become a part of the advertising ecosystem.
That was what the panelists at Internet Week Europe's Yahoo!-sponsored session, 'Agency Trading Desks: Changing the Display Ecosystem for Better or Worse?,' debated on Monday evening.
See also: "Yahoo!'s Nick Hugh on Agency Trading Desks"
On the panel sat five digital advertising experts from across the spectrum of the business. The panel was moderated by Ciaran O'Kane, Editor-in-Chief of ExchangeWire who put the questions to Marco Bertozzi, Managing Director, EMEA VivaKi Nerve Centre; Nick Hugh, Senior Director Yahoo! DR and Commercial Director, Expansion Markets; Paul Wright, Chief Digital Officer, OMD Group , and Camaran Harman, U.K. Managing Director of AD2ONE.
The first part of the conversation centred on consolidation and differentiation. OMD's Wright noted that while in UK television there exists only "four sales points," there are at least 82 different and competing ad networks, making it highly confusing for advertisers and publishers alike. "Clients," he said, "are there asking why we put 30 or 40 lines on a plan sometimes."
"If you take it back to the relationships that agencies have had with partners, the agency is there to plan and buy media directly to the publishers — TV channels, radio stations, press and so on," said VivaKi's Bertozzi. He noted that new technology has allowed agencies to take back much of what has previously been outsourced. "And we think that's good for the advertisers in terms of their results, in terms of their transparency, in terms of looking after their data for them. And it's good for the publishers because they're making better margins that they were with ad networks."
Moderator O'Kane turned to Yahoo!'s Hugh.
"This is clearly a threat to your business," he said in his mild Irish brogue. "You have agencies that are looking to internalise these performance buys. They are looking to DSPs to execute across a now liquid market. They have access to supply through the exchange, through supply-side platforms, and they are using their own data to trade. So they say to Yahoo!, we just want the impressions. Does that make you feel sad, angry?"
"I'll let you know in an hour," responded Hugh. This elicited considerable mirth from the crowd of 100 industry insiders gathered at the IAB headquarters in London, where the panel was held.
"To go back to the point that Paul [Wright] was making about having 82 ad networks," Hugh continued, "the notion of consolidating in the ad network space is an idea that we whole-heartedly support. But obviously, using the terminology 'ad networks' puts us all into one bucket. Behind an ad network like Yahoo!, we have some very core differentiators which are very hard for anyone else to replicate. We own our own audience and the supply that we have is very much exclusive to ourselves. We also have the data side. So, yes, an advertiser may come and say "I want to buy impressions," but it's incumbent upon us to help them understand the value that data has. And that remains very much a work in progress for both parties. If I were a blind ad network that didn't own my own audience, data or inventory, or my own technology I might feel like I was in those 82 that is going to disappear."
O'Kane noted that AD2ONE's Harman worked on a different model, one in which the company works directly with publishers.
"I think for any publisher they're saying, my business is built on something premium or the way that I'm going to grow my business is about premium," responded Harman. "Finding a balance between control and just giving something away, that's the difficulty."
Harman demurred that it was necessary for a business to own the technology.
"We don't own our own technology so we're not married to it," he said. "I think one of the challenges for some of the bigger businesses in this space is that they've invested millions of pounds in a piece of kit and that says, "I've got to go this way now for the next ten years because we've just spent a quarter of a million quid or a million quid, or whatever."
The conversation turned to trading desk-network cooperation, retargeting, and look-alike modeling.
"I think within the big agencies we're pretty buttoned up on how we approach [working with networks]," said Bertozzi. "We need to make big, strategic changes, so we want to centralise all the retargeting, and we do want to consolidate the number of ad networks. From the centralising retargeting perspective — it's common sense, right?
"We want the inventory wherever it's coming from," he continued. "And Yahoo! is a good example of someone who has got great inventory. We're actually a good partner of Yahoo!"
"Look-alike modeling is something we've seen that is valuable to any ad network that's worth their salt," noted Yahoo!'s Hugh. "And that's certainly something that we invest a lot of time and energy and brain power across the world on Yahoo! — so centralizing retargeting limits the potential of the trading desk to exploit that value"
"I totally agree but it is certain there is something else to that," said Bertozzi. "And we see it in our figures: as soon as someone wants to do look-alike modeling and they put a pixel on the home page the only thing that goes up in our CPMs is our retargeted cookies."
O'Kane turned to Hugh to ask, "Ad networks can scale pretty quickly and the trading desks have to follow. How does Yahoo! stay competitive in this space?"
"There's an industry-wide challenge," replied Hugh. "If you try to encourage networks to do prospecting, when you'll still be paid or judged on a last-click or view basis that favors the retargeters. But putting that aside, what we do is we try to leverage the strengths we have as a media owner and as a network, and to try to compliment what the trading desks are doing today. So a good example of that is we'll give them some of our tags. This provides an analytical tool that enables the advertiser or trading desk in real time, through the exchanges, to actually overlay our data onto theirs so they get a better understanding of their user base."
O'Kane then shone the spotlight on publishers.
"The main problem that publishers have," said Wright, "is to get their heads around is where the trading desks fit."
But, noted Bertozzi, publishers are starting to understand the trend. "[The] publishers coming though our door wanting to do private arrangements six months ago were saying, 'We don't really understand it; that's not where we want to go; it's a threat.'"
"A lot of the value on the publisher side remains untapped from a data perspective," said Hugh. "So what the publisher side has to do is make sure, in relatively short order, is ensure that they find a way they capture the value. Anyone who owns a niche audience, a quality audience, can leverage that. Now if you don't and you're just a mass market play, you're going to get everything bundled through the performance side."
O'Kane asked, "Agencies are trying to plug all these different channels. Where's it going to go in two years' time?"
Wright: "The agencies are being squeezed by their clients. They have to become more efficient. The way to pull all of these things together is using better technology and streamlining it. We don't believe in buying all of these different technology companies. I just don't think it's sustainable."
Harman: "It's not necessarily about technology, it's about scale."
-- Michael Mattis
