Agency Trading Desks vs Demand-Side Platforms: Their Roles & Differences


ATD vs DSP

Programmatic is no longer the mystery as it used to be, but sometimes it takes effort for new entrants to understand the different players in the ecosystem to make the right choices.

In a previous article we discussed the key differences between demand-side platforms and ad networks. This article will compare demand-side platforms (DSPs) and agency trading desks (ATDs).

Let us start with definitions: 

Agency Trading Desk: An ATD is a management platform within a media buying agency that centralizes the optimization and buying of programmatic media. ATDs provide the services of software development, account management, and data analytics  for the agency’s advertising clients. They help advertisers plan, optimize, and allocate marketing budgets and suggest optimal advertising strategies.

Demand-Side Platform: A DSP is a technology platform that connects with ad exchanges and supply-side platforms (SSPs) to buy ad impressions programmatically, through real-time bidding auctions. It allows advertisers (who “demand” inventory) to manage, purchase, and optimize programmatic ad inventory through one interface.

Key Differences

At first glance, the functionalities of an ATD look similar to those offered by a DSP. However, there are key differences that require attention:

  • The way ad inventory is acquired and distributed.

In the case of agency trading desks, the ad inventory is purchased from ad exchanges for re-selling. Some ATDs purchase media in advance, add a markup percentage and then sell it to their clients/advertisers at a higher price, whereas others buy media via real-time bidding and take a percentage of the revenue. 

DSPs on the other hand, are part of the advertising technology (AdTech) used by advertisers and agencies to purchase media from publishers via SSPs and ad exchanges. They manage and optimize the ad inventory purchases, ensuring that clients get the best results for the money they spend. DSPs charge advertisers a fixed CPM (cost per thousand impressions) fee that is added to the media cost. 

You can leave the ATD out of the programmatic chain, but you can’t work without a DSP:

Programmatic flow without ATD

  • The service and the cost

When working with DSPs, advertisers get direct access to the available media inventory, whereas with ATDs, media buyers pay extra fees to delegate this task to the agency and don’t execute the buying themselves.

When working with an ATD, the programmatic chain looks like this:


Programmatic flow without ATD

An ATD fits between the advertiser and the DSP. Unlike DSPs that charge fees to advertisers and agencies, which then buy inventory from SSPs and ad exchanges, ATDs charge their own fees on top of the cost of DSPs for the services of planning, executing, and analyzing the ad campaigns. Platforms that make programmatic sales easier for media companies typically keep 5 to 15 percent of the revenues. ATD services may vary greatly in terms of cost, and advertisers should negotiate in advance to avoid possible hidden fees. 

On the other hand, ATDs position themselves as industry specialists due to the experience they gather from working with numerous big clients. They claim to handle every aspect of the marketing campaign so advertisers don’t need to worry about anything. 

Advanced DSPs like Aarki, on the other hand, offer the services of campaign management, campaign analytics, as well as creative services. This is on top of the machine learning technologies that predict the user behavior and give the DSPs the ability to manage and optimize the campaigns accordingly. They also own data management platforms (DMPs) that are used to collect, store, and sort information. The DMP connects to the DSP and feeds it data, fueling ad-buying decisions. ATDs pay extra fees for DMP services. 

  • Transparency

The issues with ATD transparency date back to 2012. Since then, many brands have moved buying in-house to reduce costs and increase control and transparency. 

In 2014, an ANA and Forrester survey revealed that 42 percent of client-side marketers reported increased concerns over the levels of transparency between the client and media agencies. Top issues were media buying effectiveness, digital ad placement, performance metrics, viewability, ad serving, and billing. Some advertisers were paying up to 80 percent of their budget to the middleman, according to AudienceScience. 

With this, as Digiday UK states, “Trading desks must evolve or face extinction.” 

Advanced DSPs, in contrast, provide full transparency on exchange, publisher, and sub-publisher levels. Advertisers can see exactly where their campaigns are running, which creatives are performing the best, and get detailed reports to understand what they are getting for their ad spend.

The Current Landscape 

The role of ATDs has recently diminished in western markets as advertisers are moving ad buying in-house, but the situation is different in the APAC market. ATDs are widely used by Eastern advertisers where programmatic is in the development stage, and agencies provide support to app developers who want to tap into the programmatic market. 

The decision to go with a DSP or an ATD will vary depending on your goal. If you are ready to move media-buying in-house and take the lead of direct buys, you should go with DSPs. If you are new to the programmatic market and need experts to deal with all the media buying processes, ATDs can be a good solution. 

Programmatic advertising should not be a burden if you are aware of its basics. Keep an eye on our Insights and Whitepapers pages to get a full understanding of the ecosystem and drop us a message if you have questions.

 

Topics: Homepage Posts, Marketplace Insights