Can trading desks come ‘clean’?

Can trading desks come ‘clean’?

ISBA’s Bob Wootton raises some important questions on the nature of trading desks – and asks what it really means for an agency to be ‘clean’.

A nasty virus may have meant my missing out on Ad Week, but at least I had London Live to keep me company last week. Although I suspect I’m some way removed from its target market, I am impressed by what seems to be a single-minded pursuit of an aggressively-differentiated programme offering. To its detractors I ask: that’s got to be better than yet more of the same, surely?

But I digress; what I want to get my teeth into today is the concept of a ‘clean’ agency trading desk.

Almost a year ago I heard rumblings that a ‘very big’ trading group was looking to launch a ‘clean’ trading desk. Given that this was some months before the Publicis-Omnicom announcement, it was pretty safe to assume who the trading group in question was.

Recent chatter suggests that this launch will be soon, although not yet imminent, and could be followed by others. So, a good time to bring up some of the more fascinating questions it raises:

The trouble with absolute definitions is that one always defines the other”

– What is a ‘clean’ trading desk, and does this mean all others are ‘dirty’?

– How clean is ‘clean’, anyway?

– And, most intriguingly, how does the owner of a ‘clean’ trading desk market it without critically undermining the incumbent?

These are questions that I have yet to see posed by others, let alone answered, and I am sure that my attempts to do so will not be met with universal accord. Actually, I would be fascinated by what others think…

Let’s start with the binary definitions of ‘clean’ and ‘dirty’. Given what a trading desk does – buy media, probably automatically and sometimes in real time, informed by rich data – the only variable that might lead to a desk being classified in such a way would be how transparent it is to clients, with those practicing arbitrage manifestly ‘dirty’.

But the trouble with absolute definitions is that one always defines the other: if you aren’t good you are bad; if you aren’t right you are wrong; and so the emergence of a ‘clean’ trading desk effectively reclassifies (all) others as ‘dirty’.

As it happens, the widespread industry view is that all trading desks operate arbitrage models. So, a ‘clean’ trading desk could make quite a splash among the larger and/or savvier clients who, while often paying low fees to these desks themselves, are not at all happy about covert profiteering on their accounts.

Doubtless there will be much wailing and gnashing of teeth here, and I’m not going to reheat some of the points I have made in a previous column relating to transparency. Suffice to say that with serious questions now being asked from many sides of the industry as to the margins being earned from complex media ‘food chains’ like digital, the announcement and arrival of a ‘clean’ trading desk will attract considerable attention.

If trading desks are going to purport to be ‘clean’ they are going to have to prove it”

Moreover, I gather that despite understandable pressure from their media agencies, who seek to consolidate their precious accounts, a number of major clients are declining to fold their businesses into agencies’ trading desks, instead exploring independent, or even in-house, routes. Could this be the market force that’s driving the new ‘clean’ product pitch from agencies?

But how clean is ‘clean’ anyway? Proponents in the space know just how devilishly difficult it is, even for dedicated specialists, to get under the bonnet of these things. Clients might believe complete transparency is not a deliverable proposition, and more a clever bit of market positioning. Frankly, if trading desks are going to purport to be ‘clean’ they are going to have to prove it.

But the question which promises the most mischief is, how does the owner of a ‘clean’ trading desk market it as such without critically undermining the incumbent?

Let’s earwig an imagined lunchtime conversation, one which might be happening any day now. Nigel, marketing director of Scrumptious Foods Corp., is being entertained at L’Avenue by his media agency’s group account director, Clarissa. The atmosphere over the table is redolent with a 2007 Etienne Sauzet Puligny Montrachet Les Combettes:

Nigel: So, Clarissa, how are things at my agency and its holding group colleagues?

Clarissa: Well, Nigel, I think it’s safe to say that we’re all breathing a well-deserved sigh of relief as we finally seem to be escaping recession and re-entering a period of growth. At both agency and holding group level, we showed positive turnover and margin growth, ‘best in class’, as far as we can tell. We’ve also been investing heavily in our insight team and that was one of the things I wanted to talk to you about.

Nigel: Great, tell me more?

Clarissa: Well, as you know, Torquil and our planning team have been leading a massive consumer study on media effectiveness attribution, which draws on our group’s world-leading insight resources. The study has thrown up mountains of incredibly useful and sometimes surprising findings and the team is scheduling appointments to present the relevant outputs to each of our clients now.

At the risk of pre-empting the full two-hour PowerPoint, the long and the short for you is that we’ll be recommending a significant shift of your budget from TV into ‘online’, going forwards.

Nigel: Gosh. That will be a big change – it’s not so long ago that we reaffirmed our wedding vows with TV – in the face of significant pressure from out-of-home, as I recall!

Clarissa: You’re right, Nigel. But our job is to embrace the latest and best insight we can and to help you adapt your marketing plans accordingly. And this comprehensive study points the way.

Nigel: OK, but there’s another dimension here. We know what we’re getting on the box, and we’ve spent a lot of time and money with you convincing ourselves that it’s been working. Most of my peers operating in the online space talk about it like it’s still bandit country; middlemen taking slices, concerns over brand-safe environments, more than half of ads not being viewed by real people, click fraud…

Clarissa: Well, pending the bigger media planning discussion and decision, at least I can set your mind straight there. You’re right, it’s been murky, but very shortly we’ll be launching our new ‘clean’ trading desk, which should, at a stroke, allay many of these fears.

Nigel: That’s really interesting. But as a brand guy, I have real trouble with that. What you’re saying to all us clients, in effect, is that what you’ve been offering us hitherto is ‘dirty’, not transparent or compliant, but it’s all going to be okay now with this new ‘clean’ thing. That’s a pretty corrosive pitch, Clarissa. And how will you prove that ‘new cleano’ really does wash whiter?

Clarissa: Well, like I said re our future media plans for your brands, it’s very early days as yet, Nigel. Very much embryonic and obviously subject to much fine-tuning by the powers-that-be, informed by conversations like this one. Tell me, where will you and family be holidaying this summer?

Nigel: Oh, probably a week windsurfing with the kids on Hayling Island or some such. You?

Clarissa: Sebastian and I have just booked a trip to Bora Bora. So romantic…

Ok, in my fevered state I may have incurred some penalty points on my dramatic licence to illustrate the situation, but wouldn’t you just love to be a fly on the wall when the marketing of ‘clean’ trading desks starts…?

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