Agency Trade Desks (ATDs) are an important part of the industry. Generally speaking, each agency holding company has one trade desk that services its various agencies (some holding companies have more than one, such as specialized trade desks for particularly large clients, some have multiple with different models). Some of the major trade desks are below:
WPP -> Xaxis (sorta a trade desk, sorta not)
Omnicom -> Accuen
IPG -> Cadreon
Publicis -> Vivaki
Aegis Dentsu -> Amnet
The idea behind an agency trade desk is that it's very hard to buy media programmatically and there's a certain level of technological and industry expertise required to effectively optimize media buys through DSPs, DMPs, PMPs, etc . The reasoning continues that it would be most efficient to create a centralized entity with this expertise to service the agency broadly. To this end, ATDs have done an admirable job.
Agencies tend to bill their customers as a percent of media spend - or something serving as a proxy for that number. The deal sizes in TV are significantly larger than in digital, and harder to optimize - meaning less resources are required. As the world has moved away from TV - and towards programmatic online, the advertising world has grown in complexity - and margin pressure has also increased on the agencies. This has put them in a tough spot, to some degree.
Because agencies themselves can choose to use them or not, holding companies generally chose to bill the usage of ATDs as a secondary service. This means that the agencies would pay a fee (a percent of media spend) to the agency trade desk - which covered the cost of services rendered plus some profit. Because clients would pay a certain fee to the agency, and a second fee would be deducted when the agency used the trade desk, this meant the agency holding company kept a larger overall percent.
WPP's Xaxis is operating less like a traditional trading desk, and more like a technology company that brands can opt into using for media buying - transparently optimizing for its own margin as well as the client's KPIs. Publicis's Vivaki has been decentralized throughout the agency, no longer existing as a centralized entity, but instead having the talent absorbed by the different agencies (I don't know how they bill now that it's disbursed). Omnicom's Accuen and IPG's Cadreon appear - at least for the time being - to be staying the course with their current models.
Here are some more links and videos:
- Old but entertaining video of the CEO of Triggit (now defunct) and and Mac Denaley, then with Vivaki (also now sorta defunct) arguing about the nature of the misalignment of ATD fees: http://www.ustream.tv/recorded/16090215
- Argument between Xaxis and Vivaki about what part of the transparency is important (fees v kickbacks): http://adexchanger.com/ad-exchange-news/does-transparency-cost-performance-aod-and-xaxis-have-at-it-in-cannes/
- Thoughts about the future of agency trade desks: http://adexchanger.com/agencies/industry-preview-2016-the-clock-is-ticking-for-trading-desk-decentralization/