Brands and agencies locked in ‘stalemate’ over addressing issues in programmatic trading, says Deutsche Telekom’s global media chief

Advertisers and agencies have reached a “stalemate” when it comes to addressing the issues clients still have with regards to how agencies are managing their programmatic budgets, according to Deutsche Telekom international media management boss Gerhard Louw.

Speaking to the Drum Louw, who was also a member of the World Federation of Advertisers’ (WFA) Programmatic Taskforce, said client concerns have not yet been fully addressed when it comes to their programmatic budgets, which remains a barrier to investment.

Brands are still wrestling to make sense of the “paradigm shift” from a world where marketing was focused around brand building and generating reach and frequency for campaigns, to the world of addressable media and all the facets of “behavioural” marketing, according to Louw. But for some the “jump has been too big” when it comes to how agencies have changed their offerings accordingly.

“We began to discuss this at the WFA and advertisers began talking about transparency and data ownership and agencies were more or less saying ‘we don’t know what you’re talking about’. They would inform us about the targeting capabilities and efficiencies which of course is very compelling. But we haven’t really moved from that point – where clients are saying you are keeping stuff from us, and agencies are saying no we’re not – the perception hasn’t changed.

“We are still at a bit of a deadlock situation and so the level of distrust is still growing. At the same time the technology vendors are coming direct to the advertisers and saying ‘guys we can do this programmatic thing for you – this is all tech based scientific data driven – you don’t need the agency – but we can give you the same efficiency and effectiveness with all the transparency. And clients are saying - that sounds good – you’re talking about the same things but don’t seem to have the same issues with data ownership and transparency.”

This thinking is what instigated the WFA taskforce, whose primary objective was to establish a set of alternative options and guidelines for marketers wanting to increase their programmatic budgets but unsure of the best partnerships. The guidelines, published last September outlined three models – the in-house approach, the agency trading desk model and the hybrid – in which a combination of agency and independent third-party technology vendors are used by the clients.

It is the latter model that has generated most interest, according to Louw. Now the WFA is considering further reports which drill into options for clients around areas such as data management platforms.

However, he stressed that it’s not the first digital advertising-related phenomena to create waves for marketers who have been wrestling with new arrivals on the media plan – such as social media – for some time.

“A lot of advertisers talk in the WFA forums we have about the fact they don’t understand it [programmatic trading] and they also say what they do hear doesn’t excite them because there remain so many question marks and they are not being given the answers they would like from agencies. Social media went through a similar curve – marketers were thrown by what it was, how should they treat it, did they need a Facebook account?

“Then suddenly everyone understood it and it was just part of the media and communications strategy. That hasn’t yet happened for programmatic and one of the reasons is because agencies have kept it very under cover, unclear and marketers were confused and felt information was being held back – there were gaps in the story,” he said.

Agencies have been altering their trading desk approaches, with some of the biggest such as WPP’s Xaxis and Publicis’ VivaKi starting to spread their programmatic operations throughout ther holding groups.

Louw said advertisers will watch the outcome of these changes with interest. “There has been a bit of movement but not much, it’s all still a bit at deadlock. The arbitrage issue worries clients. We have always seen our agencies as agents that work and act on our behalf and have our best interests at heart, but the arbitrage model – being the buyer and seller of media really muddles that up completely.

"So I think that’s also behind the big resistance to agency trading desks is that - you’re not telling me where the ad appeared and the exact price but you also won’t tell me that the inventory was sold on from yourself to me, so you made money on my media buy - those are the main issues. And that is what most advertisers think now. It will be interesting to see which of those aspects are being changed,” he added.

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