• by Joe Mandese  @mp_joemandese, June 1, 2009

Interpublic finally went public with its new digital media trading system, officially joining an expanding field of big agency holding companies that are trying to become Madison Avenue's equivalent of Wall Street's investment banking firms. Interpublic said the new system, dubbed Cadreon, initially will make a marketplace around online display, online video and mobile media buys, but would eventually be expanded to include social media, digital out-of-home media, emerging digital TV platforms, and ultimate, all forms of media that can be transacted digitally. Significantly, Interpublic executives said Cadreon will accelerate the shift from traditional approaches for planning and buying media to a new era of "audience planning and buying across media channels."

Cadreon, which has been operating in beta for about nine months, follows other big agencies that have created systems for trading digital media the way Wall Street's electronic exchanges do. In fact, Madison Avenue's new systems sit on top of and work with a wide range of exchanges, aggregators and broad-based and vertical advertising networks that have grown organically in the online display advertising marketplace, and which have become a major source of transacting the bulk of so-called "non-premium" advertising that goes unsold by the sales organizations of online publishers. With "seats" on the various exchanges, and utilizing sophisticated tools, technologies, and proprietary algorithms, the new agency trading systems seek to leverage the burgeoning marketplace on behalf of advertisers, re-aggregating audiences to match the profiles and targeting needs of their brands, and ensuring that the right advertising messages are served to the right consumers at the right time.

Last November, during a keynote at MediaPost's OMMA Ad Nets conference in New York, then Havas Digital CEO Don Epperson laid out a similar vision for Havas' new Adnetik system, which Epperson said enables the agency to create "virtual brand networks" by mixing and matching audiences tailored for the needs of specific brands.

"We're starting to think of our job at agencies almost as audience aggregators vs. media planners," Epperson, who has since left Havas, told the OMMA conference attendees.

Other agencies have been following a similar route. MDC Partners' Media Kitchen has spun off Varick Media Management, which founder and president Darren Herman likens to a "Wall Street hedge fund" utilizing technology to make real-time investment decisions to build "portfolios" of audiences for advertisers and brands working across online audience exchanges and networks.

Other big agencies, including WPP and Publicis have indicated that they have similar systems, but so far have been less vocal about how they work, who they are working with, and how they are differentiated from others in the marketplace.

The Interpublic team, meanwhile, claims Cadreon is clearly differentiated from others in the field for several reasons including its mix of technology, algorithms, and people, and its plan to eventually transact, not just online inventory, but all media via the system.

One thing Cadreon will not do, says Brendan Moorcroft senior vice president-director global digital strategy at Interpublic's Universal McCann unit, is "arbitrage," a Wall Street term for making a market on the price differences created by simultaneously buying and selling equities and commodities.

Other agencies have alluded that they might seek to make a market around the buying and selling for online inventory by dynamically mixing and matching audience inventory across their mix of clients based on real-time market fluctuations.

"We're not in the arbitrage game," says Quentin George, chief digital officer of Interpublic's Mediabrands unit, which has overseen the creation and management of Cadreon. Instead, George says Interpublic's various media agencies will utilize the system to create proprietary algorithms that will dynamically aggregate and buy audiences for specific clients.

Another key differentiator, according to the Interpublic executives, is that Cadreon does not "pre-buy" inventory, or hedge against the future, potential needs of clients. Instead, the Interpublic executives say Cadreon procures inventory dynamically, and only when actually needed for a specific brand's audience delivery needs. By doing that way, they said they can match the advertising campaign or message with the best possible audience exposure in real time.

Interpublic's George says Cadreon won't replace the "face-to-face" negotiations that Interpublic agencies conduct with the media on behalf of their clients, but he says it will enable them to focus on things that enhance the value of media for the brands, such as branded content integration, sponsorships, and other concepts that require creativity and human interaction.

Interpublic claims to have already processed 55 campaigns via Cadreon, and says it is fully operational in the U.S. and will be rolled out to overseas markets soon.