There were clear advantages to centralization, initially. The units housed individuals who had what was highly specialized knowledge of best practices in the application of programmatic buying strategies towards client goals. Further, by aggregating budgets they were better-positioned to aggregate more clout with a fragmented group of vendors, allowing them to better negotiate for lower technology and/or media pricing or higher rebates (and in some instances preferred terms for equity investments), which may have allowed for lower client pricing, higher agency revenues or a mix of both. The flip-side to this approach is that agency trading desks may not necessarily have operated in as holistic a manner as some clients might have preferred given different reporting lines -- and sometimes -- diverging financial interests.

While practices have varied within holding companies to some degree, including what passes for centralization vs. decentralization and the degree to which all client teams within a holding company adhered to the same practices. From what can be observed, Interpublic’s Mediabrands and WPP’s GroupM have taken a decentralized approach towards trading desks in recent years. At both of those holding companies, centralized groups have provided tools and advisory services around best practices with an eye towards supporting implementation by client teams. It is important to note that the increasingly well-known Xaxis is a business unit sitting inside of GroupM that performs many functions which are similar to trading desks, but is more akin to a media owner than a trading desk. By contrast, Dentsu’s AmNet, Havas’ AffiPerf, MDC’s Varick Media Management and Omnicom’s Accuen are all relatively centralized agency trading desk units. Until last week’s news emerged, so too was Publicis’ AoD, which has historically supported clients of Publicis agency groups Starcom MediaVest and ZenithOptimedia.

More decentralization seems inevitable as skills become more diffused across the industry and as the client-team orientation retains its importance. It is also a positive trend for agencies and clients alike.

As noted above, one of the consequences of centralization is that trading activities may align less well with client needs than if trading activities are attached to client teams. It may only be a coincidence, but Publicis' media agency clients are disproportionately represented among those who have brought programmatic buying in-house. More specifically, Starcom MediaVest clients P&G, Kellogg’s and Allstate are among the only large brands which have actually done this (or announced intentions to do the same). To the extent that other agency holding companies align programmatic trading more closely with client teams, my guess is that such changes will be well received, diminishing to some degree the risks around further announcements that might cause investors to fear agency disintermediation.

Of course, the broader issues associated with media owner rebates on programmatic trading (and a widespread lack of understanding among marketers with regard to how some agencies are being compensated, despite providing legal/technical sign-offs) will still contribute to an industry-wide trust gap, leading some marketers to explore bringing programmatic buying in-house. Some marketers will find real benefits in tying their highly sensitive customer data to digital trading, and will find that they have the technical and financial will to establish in-house brand trading desks, although marketers who can do so sustainably will be few and far between. Thus, there are still risks associated with disintermediation, although they are minimal. However, they are diminished any time agencies operate in a manner which clients see as client-first, and towards this end the news about AoD can be viewed positively for the industry in general and for Publicis in particular.