The idea of the trading desk is one that’s more than five years old, but its role in the grand scheme of things is continuously evolving.
After years of just being the domain of agencies, trading desks are edging their way more and more into a client-side role. Indeed, many companies are eschewing the traditional formula of hiring agencies to trade on their behalf, choosing instead to create their own trading desks in-house.
How do we explain this phenomenon? One answer is the rise of programmatic buying.
In 2015, programmatic buying has become so widely accepted that even the smallest agencies see value in bringing a demand-side platform (DSP) on board. Owning a trading desk is no longer reserved for holding companies with monstrous budgets—they can be formed in small companies as well.
What’s interesting to note is the diversity of companies that are building and operating their own trading desks. Companies of all shapes and sizes are beginning to see the value of bringing trading desk technology home—from individual publishers and PR agencies to large media companies and ad networks. And can you blame them? Trading desks power many outdated processes while bringing targeting and optimization into the buying mix.
Clients have increasingly moved media buying in-house, seeking lower costs, transparency and control.
While trading desks usually have several platforms to buy various formats, for the sake of simplicity, we’re going to focus on programmatic native advertising. (Quick note: If you’re unsure about how native advertising is bought programmatically, you can read up on it here).
So what exactly do companies achieve by bringing a platform on board to buy native advertising programmatically? CLIENT SUCCESS!
Allow us to illustrate:
1. Creative and PR Agencies
Historically, there’s always been a clear delineation between creative and media agencies: Creative agencies came up with advertising campaigns, while media agencies made sure those campaigns got in front of the right consumers. And while this setup may have worked when advertising was a one-way conversation, brand-to-consumer communications has evolved into a two-way dialogue. The medium is the content that brands produce, and the distribution is social and native advertising channels.
Having a tight feedback loop on content production and distribution is becoming increasingly important, and many creative and PR agencies are evolving to include paid channels as part of their offering. As content and media become closer in the context of programmatic native advertising, creative and PR agencies that embrace new formats and channels to reach audiences at scale will help their clients win big time.
2. Media Agencies
With content marketing booming, media agencies are under a lot of pressure to redefine themselves. Built primarily for ‘push’ marketing strategies, many brands don’t see media agencies as being well-equipped to execute campaigns beyond direct response initiatives. This has largely been due to the absence of media agencies’ capabilities to execute content-driven and social campaigns that many brands have brought in-house with the rise of social media as a content distribution channel.
However, with social becoming more and more crowded, brands are now starting to move away from distributed media strategies and towards owning content and engaging with consumers on their own social media and content properties. These are new developments in the industry and many brands still need help finding ways to reach new audiences with their content. This presents media agencies with the perfect opportunity to bring innovative programmatic native advertising solutions in-house, so to take the lead on brand’s new content-driven strategies.
3. Publishers and Media Companies
The media landscape has evolved dramatically over the last decade. With the wide adoption of real-time bidding and programmatic buying of banner ads, more and more brands today care about reaching specific and narrowly-defined audiences. This has had the effect of commoditizing publishers’ inventory.
What has not yet been commoditized is custom (or sponsored) content—content that publishers produce in partnership with a brand. Custom content is usually hosted on the publisher’s property and read by its audience. As part of the package, publishers often utilize an audience extension strategy to get additional reads to the custom content they produced for the brand. Unfortunately, up until now, these publishers have relied on intrusive and increasingly ineffective banner ads to deliver value-adding content.
In native advertising, what many publishers and media companies have started doing is bringing native advertising buying platforms in-house to execute audience extension across the web. This is done through in-feed native ad formats that deliver content in a non-intrusive and cost-effective manner.
The modern trading desk is a fluid concept, and exists in a variety of contexts and situations.
4. Independent Trading Desks and Ad Networks
These two have surprisingly grown close in their role over the last few years. Soon after the first independent trading desks (ITD) started to pop up, ad networks realized that their scale pales in comparison to the scale that ITDs can access through demand-side platforms. When ITDs and ad networks rushed into programmatic buying of banner advertising, this commoditized their offering.
What ad networks really have going for them, however, is relationships with publishers. So by bringing programmatic native advertising in-house, they can closely align brands’ campaigns with the sites they work with. Just like media companies, if ad networks create custom content with brands, they can utilize programmatic native advertising platforms to execute audience extension and amplify the content across the web for additional scale.
Programmatic native advertising technology can benefit ITDs in a different way. Because ITDs rarely have direct relationships with publishers, what they can bring to the table is a truly agnostic approach to supply sources and the technology. Since ITDs don’t have any obligations to publishers, they’re 100 percent focused on advertisers and can therefore deliver unparalleled results if scale and cost-efficiencies of getting users to engage with content are what their brands are after.