• by Bill Lederer , April 7, 2014

Just when you thought there was no more room in investment bank Luma Partners' Lumascape, with the advent of so many new programmatic business models it may be time to consider a new way to think about and characterize the current box/category labeled “agency trade desks (ATDs).”

ATDs are in fact media traders, who by business design may or may not be acting purely on behalf of clients. It is becoming clear that media traders are one of two breeds:

1.     Agency trading desk (conducting execution services as managed services platforms on behalf of buyers and/or sellers).

2.     Principal trader (offering client facilitation as a risk-bearing entity and/or trading for itself as a market maker).

The distinction between the two types of media traders is real, and will be critical for market participants for many reasons. Among these: (1) Trading partners need and deserve transparency. (2) Trading partners need to understand the chain of inventory, data ownership and clear contracting language. (3) Publishers need assurance that their quality and distribution requirements will be met by the real owner of their inventory. (4) Discerning advertisers and agencies who choose to outsource media trading will want to know and evaluate the benefits and limitations of how they contract for trading.

Media traders buy and sell advertising inventory and offer their services on behalf of publishers, marketers, agencies and networks. Independent media traders bridge the gap between their clients and the programmatic media buying technology. They help make the process faster, more transparent and more efficient, which can help clients save money.

To a greater or lesser extent, some of these media traders partner with others and/or build/buy their own tech stack, data, analytics, personnel, etc. Similarly, some media traders choose to offer more or less comprehensive media services in broader or more selective media channels (digital and/or traditional) and markets (B2C, B2B, etc.). Others are independent, stand-alone businesses, while more are integrated with parent organizations. Some bear risk on behalf of clients using their own capital; still others operate as non-risk-bearing agencies.

As with earth’s lithosphere, which allows the positions of tectonic plates to shift based on environmental pressures, so too should the Lumascape adapt to the changing realities of the advertising business. This is especially true when it comes to the evolving nature of our business models and client needs. Agencies and ad networks are not what they once were, and neither are DSP trading platforms. Publishers, advertisers and agencies are being offered more innovative choices including: (1) risk taking by traders, (2) more transparent reporting and invoicing and (3) specialized service that makes the complicated process of programmatic media trading easier.

Welcome to the brave new world of media trading.