WPP Sticks With Tech Ownership Strategy As Xaxis Buys Crystal Semantics

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xaxis-crystalWPP Group’s 24/7 Media – which will soon be absorbed into Xaxis – has acquired 12-year-old semantic ad-tech company Crystal Semantics and its 15 employees from previous owner Ad Pepper Media.

London-based Crystal's technology can be applied a few ways, said Rob Schneider, 24/7 Media's SVP of corporate strategy and platform development.

First, it offers straightforward contextual analysis by categorizing content according to meaning. That product is licensed to a number of publishers and ad network partners. Second, that same contextual technology can be applied for audience modeling purposes, by identifying content associated with a user's browsing history. Xaxis aims to focus on this purpose to augment its audience targeting engine. Finally, Crystal has a "brand safety" angle – allowing advertisers to avoid appearing adjacent to objectionable content.

"There have been amazing advancements in the last three years with regard to increasing the efficiency and effectiveness of how digital advertising is bought and sold. One area that has been neglected, to everyone's chagrin, is the experience of the Web and the value of content," Schneider said. "We're excited about getting this proven semantic technology into our core platform to inject context and content classification in a programmatic way at scale."

The move shows WPP remains bullish on tech ownership, a world view that sets it apart from its holding company brethren who maintain agencies should license rather than possess technology. WPP CEO Sir Martin Sorrell rejects that idea, as does Xaxis CEO Brian Lesser.

WPP's ambitions toward developing a technological stack fully emerged in 2006, with the acquisition of 24/7 Real Media, and continued with acquisitions like AdGooroo for its Kantar research division. Just last week Xaxis unveiled plans to absorb 24/7 Media and its technology assets, including a publisher ad server and data-management platform.

Those ambitions have also suffered occasional setbacks, such as when Xaxis stopped using its own demand-side platform (DSP) earlier this year.

Crystal is in the same class as companies like Peer39, a semantic tech provider acquired by DG for $15.5 million in 2012. Crystal's 15 employees are split about evenly between engineers developing the technology and semantic linguists, Schneider said.

Terms of the acquisition weren't disclosed. In addition to its ad network and publisher licensing arrangements, Crystal Semantics is integrated with AppNexus.

AdPepper, from whom Xaxis bought Crystal Semantics, first acquired the contextual vendor in 2006 and has run it as a subsidiary since then, licensing the technology to ad network partners while also maintaining direct ties with some publishers in Europe. Even after the sale to 24/7, the majority of its direct revenues in the short term may come from subsidiaries of Ad Pepper.

In a statement, Ad Pepper said its sale of the unit was in line with its move away from technology ownership.

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