Trading desks are not that new anymore, but they are still evolving. In this post I want to define the specifics of a trading desk and help you to understand the role they play.
However, in order to fully understand trading desks we need to dig into the ecosystem they live in and the basic structures and players of that world.
The roots of online advertising revolve around brands speaking directly to media owners and buying pre-guaranteed media from them.
An example of this operating in the digital space is a brand buying ad space on the homepage of a website for a set period of time (for instance, one month), priced at a cost per thousand (CPM) negotiated in the traditional sense by two parties. Essentially, this was content being used as a proxy for audience. You didn’t know who that audience were but you could make educated guesses based on the content they were reading.
Of course, as the level of insight available in the digital space became more sophisticated it was more and more possible to define the types of people – based on characteristics, search behaviour, offline data etc. – that you wanted to show your ads to. Today, it’s a combination of technology and the data that powers it, and a skillset that understands when and how to deploy these assets and then measure them to a consumer that lives seamlessly in a multi-device and multi-channel world.
Agencies, ad exchanges and programmatic
To reduce inefficiency in the traditional trading model, we saw the development of ad exchanges and the automation of the buying and selling process by way of an online auction. Now it was possible to bid on media from a range of publishers in real time in a more democratic way: the highest bidder wins. This is also called programmatic advertising. Clear comparisons can be drawn between the evolution of media trading and the financial stock or commodities markets.
Programmatic levelled out the playing field between large and small sellers and buyers. Smaller publishers now had the opportunity to sell to a wider pool of brands and less powerful brands were given the opportunity to serve ads to a wider prospect pool of consumers by outbidding larger players that otherwise tied up ads purchased in pre-guaranteed deals.
This automated approach was largely powered by cookies which enabled buyers to make a bid in real time – basing decisions on what they know about that user’s previous behaviour online
In this system the DSP (demand-side platform) operates to execute bids on behalf of brands (or an agency) and have SSPs (supply side platforms) monetising media space on behalf of media owners.
Ultimately this is about serving the right ad to the right customer but in a much more democratic and overall efficient manner.
Media trading desks
Enter the trading desks. An additional layer introduced to help support this buying process. The media trading desk sits between the brand and the media buying platform (DSPs). In some cases they were developed by the agencies themselves to curate the skill sets required to run programmatic advertising and in order to evolve, and protect advertising budgets. In other cases, Independent Trading Desks (ITDs) emerged to demonstrate an independent approach.
Increased trading by proprietary technology, proprietary data and linkage capability between first and third party data meant trading desks that could combine the above value-add elements could genuinely improve the accuracy of targeting and ultimately demonstrate incremental performance of media campaigns.
In this way, media trading desks are a key component in the journey to show (or exclude) the right ad to an existing customer or predefined prospect, in the most effective method, in a combination of channels and devices, and at a time that will drive overall post-click conversions now and engagement or post-view conversions in the future.
“The right ad, to the right user, at the right time” still rings true, but we are much more advanced now.
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