If Brands Hate Web Ad Trading Desks So Much Why Are They Throwing Hundreds Of Millions Of Dollars At Them?

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Arbitrage

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If advertisers hate agency trading desks so much — with their alleged non-transparent pricing, and their alleged self-dealing arbitrage practices — then why are they increasing the ad budgets they give them?

Trading desk revenue is up at WPP's Xaxis, according to AdExchanger:

Xaxis grew its revenue by 28% during the first quarter, said Pivotal Research Analyst Brian Wieser in a research note. WPP had previously stated the business had 2012 media billings of $270 million and a headcount of 200.

AdExchanger earlier reported that revenue is up at Interpublic's Cadreon desk, too:

First, pushback or no, Cadreon's global annual revenue is substantial – in the realm of $100 million, a source tells AdExchanger. Last year, Cadreon grew about 28% in North America and 150% internationally.

We previously noted that several clients — Procter & Gamble, Ford, Citibank, Unilever, Kimberly-Clark, and AT&T — had pulled their budgets from agency trading desks.

The criticism of agencies is that they buy the web advertising media upfront with their own money. They then slice and dice it, according to data they've gathered themselves, making it more targetable and thus more valuable. the media is then sold at a premium to clients. Clients don't know what the original price was — and thus, nor do they know what the agency's markup is.

But it seems that while the dissidents may be shouting louder, the clients are actually voting with their wallets.



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