Cannes 2016: GroupM Sees Connect Initiative Becoming Part Of Its Foundation

GroupM-Connect-CannesWhen WPP officially launched Connect in May, it hoped the endeavor would evolve into a core aspect of its media buying umbrella GroupM.

“What we’re building centrally will eventually become part of the overall GroupM operation,” said Connect CEO Ruud Wanck. “We’re looking at it as an incubator. But as all media goes programmatic over time, and we firmly believe anything that can be bought programmatically will be, this will become a foundational part of GroupM as a whole.”

While Connect isn’t an agency, it has its own P&L and employees who are spread throughout GroupM’s media agency network. Wanck compares it to microchip manufacturer Intel, whose semiconductors power nearly every personal computer, even if they aren’t sold directly to consumers.

But Connect’s launch also created some industry skepticism around GroupM’s motives. Some critics thought GroupM was using Connect to capture dollars from clients who wanted to avoid having ad spend placed in the hugely successful but nontransparent Xaxis.

In Cannes, Wanck and MediaCom Chief Digital Officer Deirdre McGlashan sat down with AdExchanger to give their take on what Connect is meant to be and where it will eventually go.

AdExchanger: Under what circumstances will MediaCom bring in Connect, and what capabilities does it add?

DEIRDRE MCGLASHAN: There’s no one answer to that. The model is different in different markets. We don’t see differentiation between Connect and MediaCom. We don’t see Connect being brought in. The AB InBev team is made up of people who are part of MediaCom’s AB InBev team, but they’ll hold HR contracts that are Connect contracts.

RUUD WANCK: We don’t develop it as a separate organization, but to fast-track our entire group from media investment management to real-time investment management. In the old days, that involved strategy, planning and buying. But in the real-time world, that includes data and a lot of technology. Connect is about leveraging and applying the skill of our Group in real-time media investment management.

DM: So for Coke in Mexico, we bought in WPP’s Alliance Data, Coke’s first-party data, as well as cinema data from a Mexican cinema chain. We identified what teens had an affinity for and verified that the YouTube star we’d chosen was absolutely the right person. We were able to know what teens wanted before throwing out a bunch of stuff and optimizing from that.

Is GroupM Connect like what Publicis Groupe tried to do initially with VivaKi?

RW: No. VivaKi centralized all of the work in a completely separate company. And VivaKi could work for direct clients. We objectively have said that Connect is to support and develop agencies. Connect does not go direct to clients. When there is an opportunity for a direct client, it goes through one of the specialist companies that have been acquired or are part of Connect.

There’s also some chatter that Connect was created because advertisers are concerned with Xaxis’ practices.

RW: That comparison is completely wrong. Xaxis is an all-in-the-box service to clients. When clients want to maximize opportunities they can get out of programmatic, they buy an off-the-shelf solution in Xaxis and pay a rate card for that. Connect is designed to move ourselves into real-time media investment management. And Connect uses Xaxis products, so they don’t compete. They are two completely different layers.

DM: Xaxis is a product. Think of shampoo: You can pick it up, turn it over, look it over, see what’s in there and make a judgment on whether you want to pay for it. MediaCom’s programmatic specialist unit is an agency service. So to extend that metaphor, we are the hairdressers who choose which bottles of shampoo to use.

Are all clients who use MediaCom’s real-time buying engaged with Connect?

DM: They all use MediaCom’s programmatic specialist unit. It’s a blended team. In some markets, a significant portion of that team is Connect, and in other markets, a smaller portion of that team is Connect. And in other markets, there is no Connect entity.

What markets does Connect have the most presence?

DM: Our fastest-growing markets are the same ones as MediaCom’s fastest growing markets.

RW: As a group, we can deliver programmatic to well over 50 markets in the world.

When WPP bought Exchange Lab, Catalyst, et cetera, did that all happen with the intention of creating Connect, or did you acquire them and subsequently decide to build out Connect?

RW: A combination of the two. Some entities that have been made part of Connect, like Catalyst and Prisma, which we had already acquired, had become a foundational layer for the development of Connect. And there were several we did later, like the Exchange Lab, which were done as Connect was already live. We’ll continue to acquire and add specialist capabilities to fast-track the platform.

What capabilities are you looking at?

RW: I’m going to be vague, or I’ll get phone calls. We see Connect as a foundational layer, not just around programmatic but all real-time and biddable media. That includes search, social and mobile as it goes more and more to a biddable environment.

DM: And it will include TV and out-of-home as those media come online in a real-time fashion.

Speaking of real-time programmatic TV buying, when’s that happening?

DM: We already see it in some markets, like Australia and the US.

Is that at the local level?

DM: It’s at the local level because you need to have the relationships with the entities that have IP that can be targeted. That’s why it’s the set-top boxes right now: anything that has a way of understanding who the person is and a delivery mechanism. The promise is ingesting and interpreting the data around it and to understand more about the consumer. Real-time bidding is just a way of buying, the end of that long chain of work.

RW: We think of linear TV as the starting point, then there’s addressable TV and real-time or programmatic TV. The phase we’re in is addressable TV, which means you use the set-top boxes to address the right ad to the right audiences at the right time.

With real-time media, the price is determined at the point of purchase. That’s the difference between analog and programmatic: The first is a negotiation, the other is an auction. For that to happen to TV is a technology and business model challenge. To deliver ads by set-top box is doable, but to deliver millions and millions of ads simultaneously is going to take some time from a tech infrastructure perspective. And the business model needs to make sense for the larger TV networks to make that transition.

Addressable TV will move very fast. Full-on programmatic TV will take a bit longer. The US will be first, absolutely. I think we’ll see the first real-time bidded TV ads within three years. It’ll be for a certain event, like the Super Bowl.

Why would the Super Bowl allow that?

RW: Because it almost is an auction, the way advertisers have to bid to get a spot. That would lend itself very well to a programmatic approach.

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