Package-Goods Marketers Build Private Trading Desks to Hoard Data
Some of the largest marketers in the world are fencing off their data. Unilever, Procter & Gamble, Kimberly-Clark and Kellogg are opting to keep their data and what they learn from using it to themselves rather than operate through their ad agencies.
Agency holding companies in recent years have opened central trading desks to buy digital media for multiple clients based on common pools of consumer and media data, but more clients are opting for private systems. One reason is expense -- data and insights cost considerably more on the open market than the actual media impressions -- and another is practicality. Tying up data and insights in a system owned by an agency, some people familiar with the private systems said, could essentially prevent marketers from ever changing shops because of the risk of losing access to the database and having to start from scratch.
Unilever and Kimberly-Clark Corp. in the past year have moved to create their own standalone data-management platforms and trading desks, working with WPP's Mindshare but staying separate from WPP's centralized Xaxis trading desk.
That came after Procter & Gamble Co. more than two years ago joined with Yahoo and at least two outside technology developers to launch Hawkeye, its in-house data-management and trading desk (also known as demand-side platform) for digital ad buying, according to several people familiar with the matter. P&G declined to comment. Kellogg Co. also has brought its programmatic digital trading in-house.
Executives of tech companies working in the business said large automotive, financial-services and retail marketers also have moved to take data platforms and trading operations in-house, but declined to identify the companies.
Unilever last year launched its own trading desk using its private data platform DRAW (Digital Reporting Analytics Warehouse) to keep what it learns from digital media trading within its own walls. Unilever VP-North American and European Media Rob Master said he sees value in sharing best practices among non-competing marketers when possible. "But we feel that, just based on our global scale and our investment in this space, that there's so much we can learn from Dove to Axe to Hellman's by just organizing it in the right way," he said. "We've found between the trading desk and DRAW's enormous learning within our walls."
Mark Kaline, Kimberly-Clark global director-media, licensing and consumer services, also said his company moved to a private trading desk operation managed by Mindshare. "We designed it this way so we can retain the data and plow it back into our [customer-relationship management] systems," said Mr. Kaline. "And hopefully we can get plans that get smarter as they go."
Jon Suarez-Davis, VP-global digital strategy and North American media at Kellogg Co., said his company has moved its data and trading operation in-house. And P&G, which like Kellogg still uses Starcom MediaVest Group for much of its digital and other media buying, set up its in-house data and trading system to keep what it learns private. While the growing group of data hoarders includes big marketers, they're still relatively few.
According to a 2012 Forrester survey, a quarter of marketers said they were using agency trading desks, but only 7% reported using in-house trading desks. The survey also found 18% of marketers were working with demand-side platforms not affiliated with agencies.
"My sense is that ultimately a lot of marketers aren't really set up to take execution fully in-house when they have traditionally been so reliant on external support," said Forrester analyst Joanna O'Connell. But for the same reasons multiple agency brands exist within holding companies to manage client conflicts, she said, "the holding-company trading desk is not long for this world as a centralized execution model."
WPP's Group M believes the holding-company model is alive and well, but is perfectly willing to "white label" the technology to offer dedicated service for individual marketers, said John Montgomery, chief operating officer of Group M Interaction. "There's a risk to bringing your own trading desk, your own data-management platform in-house," he said. "It's a distraction for the client. It's not their business. It's hard to maintain best practices when you're just doing it for one client, no matter how big it is."
Scale clearly plays a role. Mike Peralta, CEO of AudienceScience, which works with agencies and marketers to build data-management systems to fuel programmatic trading, said he's seen a trend toward companies taking their data in-house, but he said big, global companies are the ones most able to take that step.
He said contract terms are now "much more equitable" among all parties, and that WPP contractually cedes ownership of proprietary data to the client.
While the data-control issue today focuses on digital media, marketers are also looking to apply what they've accumulated in storehouses of consumer contact, web traffic and sales data to traditional media, often looking at doing so in-house, said Jeremy Weiner, CEO of Encino, Calif.-based Media X, which is focused on building systems to allow just that.
Former P&G global media VP Bernhard Glock is a Media X adviser, and Bryan Towne, senior VP-strategy and business development, was until September a P&G information-technology employee working in media. They declined to discuss Hawkeye, but Mr. Towne said he sees a trend toward advertisers bringing data platforms and programmatic buying in-house.
That may mean, he said, "the agency loses that business," but it may also bring agency personnel even closer, working on-site with marketers' own data platforms, "almost like having an outsourced shop within the building."