With nearly 50 billion websites from which to serve ads, national advertising agencies are incorporating the fast-growing trend of programmatic digital media buying through trading desks, which are predicted to make up 50 percent of media purchases in 2015.
Locally, Tipping Point Media Inc. is on the pulse of the trend. The firm incorporates trading desks, organized services that work on bid-based and audience media buying, to remove the multiple levels of middlemen or ad networks from advertising and provide direct service between an agency and an ad exchange for the digital space.
With a vast digital inventory available for purchase, navigating ad networks weighs down a customer’s media budget without directly targeting the intended consumer.
"Our goal is to help clients stretch their budgets further," said Michelle Ashby, CEO of Tipping Point Media. "We know marketing budgets in general aren’t increasing by double digits, so if we can find a more effective way for them to buy what they need and target that individual that they’re trying to reach, (they’ll be) more effective at it overall."
Trading desks enable companies such as Tipping Point Media to buy inventory directly from ad exchanges while incorporating first- and third-party data for audience targeting, officials said.
In the advertising industry overall, some 30 to 35 percent of all media use is being purchased this way. Forty percent of Tipping Point Media’s business is digital.
"The old saying was ‘I know 50 percent of my ad dollars are wasted; I just don’t know which 50 percent,’" said Barbara Pierce, president and managing member of Tipping Point Public Relations, part of Tipping Point Media. "Now with digital you know what 50 percent are moving the needle and you know it a month in, so you can adjust."
The first agency trading desks started in 2007 for a variety of reasons that included waste reduction, high margins and the decreasing value of intermediaries, the rise of new technologies, the cost of digital agency labor and retaining talent, a 2011 study by the Association of National Advertisers states.
Traditionally an states agency would buy space from the network, which would buy it from the ad exchange. The process was costly, however, as companies had to pay both the network and the agency to advertise their products. The trading desk method is cheaper because it removes a layer of cost, freeing up money for added media channels.
When trading desks were first established, remnant inventory was the only data to be accessed. Now, however, through different layers of targeting based on clients’ online behavior or what websites they visit, a company like Tipping Point can layer ads to get to them more directly.
With a centralized platform, the benefits agencies gain by switching from ad networks to trading desks are better targeting methods, stronger analytics, consistency of service and a better return on investment as the process of advertising becomes more efficient for their clients. The process also allows agencies more control over spending and more influence on the entire media process.
"Because of the demand for digital media buying and planning, we’re actually creating this trading desk internally to make it even more efficient," Pierce said. "(It’s) because of the demand that we’re seeing from clients and the opportunity we have to make this buying even more efficient and make their dollars go farther."
Tipping Point has been working on the process for a year and is starting to test clients with the new approach. The target client is one with at least $100,000 for media spending.
"Client education is part of the process, so we wouldn’t go in and just say, ‘OK, here’s the new thing,’ because there are so many shiny new toys available to them," Ashby said. "This is something we vetted, and we have a couple test clients working with us now so we’ll be able to present those case studies to make them more comfortable. We can target all the way down to the ZIP code, so it makes it more affordable for smaller clients to do it."
More than 100,000 choices can target audiences with information gained from data providers that monitor how websites are used and by what demographic and then inform the agency to enhance a company’s media campaign.
The company targets an audience at six different levels: audience, channel, key word, page level, retargeting and geography. A typical client requires three layers of targeting.
"We’ve been fortunate that our clients are pretty forward-thinking, and they know that we’re not going to be reckless or careless with their budgets," Ashby said. "We’ve always taken an approach where we’ll do the marketing plan and then we’ll have a certain percentage of their budget where we’re saying we want to try something new."
Looking toward the future, digital advertising will continue to expand, company officials said.
"It’s a time investment, and you have to really decide is this really where it’s going," Ashby said. "Let’s flash forward even more years; I believe we’ll be able to buy radio this way, we’ll be able to buy television this way; this is where it’s going."
Officials declined to disclose how much the firm has invested in the effort, but it has invested in technology, training and people.
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