Home Ad Exchange News GroupM Quits Open Ad Exchanges? Not So Fast

GroupM Quits Open Ad Exchanges? Not So Fast

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groupm-auctionGroupM made waves last week when Ari Bluman, chief digital investment officer for North America, said WPP Group’s media agencies will stop buying impressions in open auctions by the end of 2014. It turns out that’s not quite the case, as Brian Lesser, CEO of WPP’s Xaxis programmatic platform, made clear in public comments Tuesday at the Cannes Lions festival.

“By the end of this year, we don’t see there’s a necessary need to buy on open exchange,” Bluman said in a Beet.tv interview published last week. “One hundred percent of programmatic will be private deals.”

Coming from the world’s largest holding company, representing more than $5 billion in annual digital spend across agencies including Maxus, MEC, MediaCom, Mindshare and Xaxis, the edict came as something of a bombshell. Most interpreted it to mean all of WPP Group’s media agencies, including Xaxis, would no longer trade in broad marketplace but instead accelerate direct integrations with publishers.

Or it would be a bombshell, if only it were true.

Speaking on a panel in Cannes hosted by Rubicon Project, Xaxis CEO Brian Lesser walked back the claim somewhat. Lesser confirmed that his group will increase the percentage of media spend trafficked through private exchanges and automated direct deals. But he said the upper limit of the company’s publisher-direct buying activity is 90% to 95% of spend. And he gave no indication that that goal would be accomplished this year.

“So GroupM, late last week, said that by the end of the year, they’re going to buy zero impressions at auction,” Lesser confirmed in response to a question from moderator Jay Sears, who leads demand sales at the Rubicon Project as the company’s SVP of marketplace development. “That was a blanket statement, obviously, and since we’re part of GroupM, that would apply to us.”

Currently, he said, 62% of Xaxis’ inventory is bought on a reserved or “forward contract” basis. Approximately 40% is still purchased in an open marketplace environment.

“You probably don’t want that to go to zero because there is a need for that. But I’d like to see that at 90-95%, and the reason is simple,” Lesser continued. “Advertisers use WPP or Xaxis because they want a competitive advantage in media buying. That means they should use their leverage to get better rates. We feel if all you’re doing is using your first-party data to buy inventory in an ad exchange, you really haven’t accomplished much.”

Co-panelist Arun Kumar, president of Mediabrands Audience Platform G-14, chimed in with an endorsement of open auctions.

“The exchange still plays a vital role,” Kumar said. “Is it possible to find inventory that’s viewable, verifiable and still adds value? It is, which is why our position is that it’ll always be fluid. The percentage of what goes into a private marketplace versus what goes into an exchange will be fluid. But the role of the private marketplace will become bigger and bigger. It won’t decline.”

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Lesser answered, “I agree with that. But if you have scale, and the only businesses I think will survive in programmatic will be scaled businesses, then you don’t necessarily need to go into the marketplace because you’ll become the market. Within WPP, that’s our ambition. And I’d also say publishers will make more money doing this. Our publishers make 30% more on a CPM basis than if they were to use an exchange or open auction.”

The exchange was just one of a number of wild moments in an hour-long discussion among leaders of the four largest holding companies’ trading desks. More to come in our full transcript, to be published Wednesday.

Ryan Joe contributed.

 

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