London watches Australia for clues on rise of retailer trading desks

By Brendan Coyne | 24 March 2015
 

Australia is being heralded in London as the bleeding edge of programmatic. The problem for media agencies is that cuts both ways. Especially when it comes to the rise of the retail trading desk.

Rubicon Project global general manager Jay Stevens told the Advertising Week Europe conference on Monday that Australia’s rise to pre-eminence was “fascinating” and that the market was punching well above its weight.

But that could also mean some of its agencies will be the first to discover just how much of their lunch retail trade desks, as well as those of airlines and banks, will eat.

“You are going to start to see a lot more fragmentation amongst the buyers,” said Stevens.

One of the most interesting programmatic developments over the last year, “specifically in Australia, has been the rise of these retail trading desks,” Stevens told London ad execs.

While the launch of Woolworth's DSP is imminent, Stevens name checked its rival. And the rumours it has big plans in terms of headcount persist.

“So Coles for instance has a budget for a team of 60. I’m not sure how big they are now, maybe just a dozen or so. But it has a budget for a team of 60 people dedicated to leveraging point of sale data to be able to execute - to take budget as a media buyer - as an agency essentially. Qantas is doing exactly the same, with Red Planet. And I find it fascinating that this is actually coming largely out of Australia as a first port of call.”

Is that because it is easier to innovate in a smaller market?

“Could be,” said Stevens. “But it’s a pretty advanced market, most media owners are exposing their inventory to programmatic channels, [if not] all of them. So there’s enough inventory there.”
He thought the duopolistic nature of the market was another unique factor. “Whether Commonwealth and ANZ, whether Qantas and Virgin, News and Fairfax; really there are only two big players in each [sector] and each is always looking to get a leg up on the other.”

Speaking later to AdNews, Stevens said he wouldn’t be surprised if the banks officially launched their trading desks next. Whether Virgin launched a desk locally or globally would also be interesting to watch, he said. But the trend would continue and other markets are following. The data-set war is heating up, he told the conference.

“To be able to take travel data and leverage it to target users who you know are in-market because they have just bought a particular flight is a great [advantage]. There is no doubt that a number of others are moving into this space, or are in it already,” said Stevens.

“Look at what WPP is willing to pay for Dunnhumby – which is essentially the database marketing arm of Tesco. The conversations are of cheques worth a couple of billion pounds. And there is competition for that. [WPP] are not the only ones bidding for it.”

That kind of purchase data is “pretty powerful”, said Stevens. “And ultimately, arguably, the biggest threat to the agency that exists today is the opportunity for the retail trading desk to essentially carve budget away from the brands and the suppliers that they work with directly.”

The supermarkets can go in and “take money from Unilever, P&G and Nestle directly rather than it flowing to the agency. Who has the better relationship, the agency or the biggest distributor of their product?”

Ultimately the retailer that sits on all that point of sale data “can exercise customer communications curriculums that are far more advanced, based upon customer life-cycle, than any agency would ever be able to do”, said Stevens.

So what are agencies going to do, if retailers, banks, and the rest of the high street are mobilising on data?
Stevens said that was an interesting question.

Keep an eye out for the 3 April print edition of AdNews for a Special Report on programmatic. 

By Brendan Coyne, London-based former editor of AdNews, reporting from Advertising Week Europe 

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