Back in the day, when supermarkets were trying to figure how to make more margin, they introduced their own brand goods to compete with established brands. One Irish supermarket chain brought out its own line of "Yellow Pack" FMCGs, displaying them alongside the likes of Kellogg’s and Persil. Sure, the packaging wasn't exactly top-of-the-range – but the strategy did shift a lot of boxes of yellow-boxed corn flakes. It seems to me that WPP is looking to repeat a similar trick in the display market by introducing its own "Yellow Pack" ad network.

There’s been a lot of debate privately in the industry about the Group M Marketplace – and what effect it will have on the display market in the UK. GMM is essentially an agency-owned ad net built on the infrastructure of 24/7 Media, using blind inventory form the UK’s top publishers. This inventory is being optimised with client and publisher data. And the whole operation is being run by resource recruited directly from the ad networks and publishers. Seriously, this has got disruption written all over it – and the agency own-brand ad network, in this case GMM, will be one of the big stories in 2011.

How Does An Agency Build An Ad Network That Works?

Let’s get something straight. It is very difficult to build a successful ad network. You need best-in-class technology, talent and you must be able to deliver. Brands and agencies do not suffer under-performing ad nets gladly anymore. If you’re not hitting those KPIs, you’re off the plan. Bye! So how is WPP going to make GMM successful? The infrastructure wasn’t an issue as it already had 24/7 to build out the GMM proposition. The biggest hurdle was always going to be the inventory and data acquisition.

How do you get publishers on board? WPP has deliberately positioned GMM as a blind network to offset publisher fears of sales channel cannibalisation. Outbidding the ad networks for impressions and tying it all into trade agreements is giving them access to quality inventory.

That’s the inventory bit taken care of it. What about data? GMM is reportedly offering to pay publishers for their data. How that data is priced is not known? But it is prepared to pony up the cash for it – unlike most of the big ad nets which happily drop cookies on publisher users without any thought of compensations. In the absence of an evolved data market, this will prove attractive. GMM will also have access to client data which it can also layer on top of the impressions within the marketplace.

What about the agency media plans? Stupid question, really – but has to be asked. It’s not as if GMM – a WPP-owned company – is going to have any trouble getting on the plans of any of the agencies within the group. Getting test budget will be very easy. Ok, what about clients? Won’t they be concerned that their own agency is effectively arbing inventory bought directly from publishers? The simple answer is no. If GMM is hitting the KPIs set by the clients and running ads against brand safe inventory, there will be no recriminations or demands for investigation. They really won’t care.

And who will run this new operation – surely not just agency staff? As they were building out GMM, WPP quickly realised that there simply wasn’t the talent available within the agencies to make this thing work. GMM has been aggressively head-hunting ad ops, data analysts and publisher acquisition people from the publisher and ad network world. And from what I hear they have hired wisely. They are now some smart people over at GMM to at least have a proper tilt at the market.

Ad Networks Be Damned – We Sort Of Don’t Need You Anymore

GMM will be judged by its performance – and it won’t win all the fights. But the fact that it is modelling itself on an ad network model, and will be able to leverage client and publisher data must be privately worrying ad net execs. GMM is going to have the top publisher in its network – albeit blind. If there’s only going to be five spots on a media plan, you’ve got to be thinking that both Zap Trader (WPP’s DSP solution) and GMM are going to be on most of them. That leaves only room for three third-party buyers on any given plan. There will less budget available, and more importantly, less margin to be made from the WPP display pot. And lest we forget WPP is the biggest display buyer in the UK and European markets. Can ad nets go direct, and start pitching advertisers? Possibly. But unlike the US, the UK agencies are ridiculously strong and have a vice-like grip over the market. There’s only been one ad net that has managed to disrupt the UK agency model in recent times – and even it had to acquiesce to the big holding companies to ensure future growth. The fate of the ad nets is tied to the agencies. And to the end, they must find a way to out-innovate and outperform the likes of GMM to stay in business. But I never bet against the ad network model. It always finds a way to stay competitive and one step ahead.

How Much Is My Data Worth – And Why Should I Sell It To You?

Publishers are in a tricky position at the minute. They want to sell their data, but have no idea how. And in the absence of an established market there is no means of valuation. So when the leading European display buyer offers to buy it, what do you do? It might be a no-brainer to accept the cash. But the data market is arguably about to kick-off in 2011, and publishers might prefer to see how it develops. The difficulty here is that WPP might be looking to bundle these data deals into its annual trading agreements with publishers. Publisher X might not want to sell its data, but might have little choice, especially if it’s looking to increase spend through the WPP agencies. Is selling all your data to GMM a threat to your premium inventory? Will brand budget that should be going to publishers move into GMM once it’s up-and-running? I expect that won't really happen given that publishers could pull their inventory from GMM at any time. Publishers will no doubt weigh up the pros and cons. It certainly doesn’t help that you might be sacrificing hundreds of thousands of pounds in media budget if you say no.

GMM is the first but not the last agency own-brand ad net in Europe. All agencies are going to have dynamic supply and managed publishers going forward to stay competitive. GMM is WPP’s managed publisher supply - with a "special sauce" optimisation layer. But it will only get on plans if it can deliver. If KPIs are not met, it will be kicked off the plan just like every other under achiever. The crucial battle here will be over publisher data. Will the publisher let GMM pixel their users for a valuation that can’t be benchmarked by the industry. Do you sell your data to GMM when it could be competing with you on the same plan? These are real concerns. I expect the debate to rage around this when GMM finally goes live in 2011.