In 2007, that WPP Group made big waves with its acquisition of display media technology firm 24/7 Media, worth $649 million. By bringing a publisher-facing ad server and network in-house, the holding company had staked out a tech ownership strategy that continues today.
Today that premise lives on at WPP, but the 24/7 Media brand does not. Going forward, the tools and publisher relationships formerly grouped under the 24/7 name will serve as the sell-side underpinnings of Xaxis’ platform, supporting CEO Brian Lesser’s vision of a programmatic buying company built on thousands of direct connections to media companies. (Read the release.)
Not coincidentally, the absorption of 24/7 Media into a programmatic framework comes as another traditional publishing network, ValueClick Media, prepares to “go programmatic” with a name change and demand-side platform (DSP) of its own.
Brian Lesser talked with AdExchanger about the future of Xaxis.
AdExchanger: What’s the rationale for Xaxis absorbing 24/7 Media?
BRIAN LESSER: Xaxis has always been a much broader business than a trading desk. Our products are focused on acquiring inventory directly from publishers — quality inventory that we can append to data that we’ve created in our DMP (data-management platform). And then we offer audiences that perform well against an advertiser’s objectives, be they performance or branding objectives.
Within that, technology is incredibly important. And not just technology on the demand side. Technology on the supply side has become just as important.
It makes perfect sense to merge 24/7 into the Xaxis brand so we can offer advertisers and publishers a global programmatic media platform.
Does this effectively turn 24/7 into an SSP? And does Xaxis effectively become an ad exchange?
I wouldn’t call 24/7 an SSP (supply-side platform) and I wouldn’t call Xaxis an exchange, but I would say we now have more pieces in a total platform that can directly connect advertisers to publishers.
When I talk to our advertiser clients, they’re frustrated that although automation has made things more efficient, it has abstracted what they’re buying from publishers. And when I talk to publishers, they’re frustrated that automation hasn’t meant that they can sell their premium inventory at better rates to better quality advertisers. Part of that is because there’s too many small players – DSPs, SSPs, ad exchanges. Advertisers and publishers simply want to connect more directly.
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It starts with the data-management platform, which we started developing within 24/7. We’ve always worked very closely with 24/7 on the Xaxis DMP, and this gets us much closer to the developers of the technology. I think the data-management platform and the decision engine are the most important components of that platform.
The next thing is Open AdStream, which is a publisher ad server. Open AdStream allows publishers to better understand their audiences and construct audiences they can sell through a marketplace. We now have a fully functioning audience development tool for publishers, which will enable us to help publishers create more valuable inventory that can be offered to our advertiser clients.
The MIG is going away as a brand as well?
Yes. Much to my disappointment, since it’s a company I started. You have to be willing to cannibalize the things you created in order to progress.
When did you begin the integration with 24/7?
We started this in 2012, when we collaborated with 24/7 on a product called Connect, a mechanism where publishers can offer their inventory programmatically to buyers. Many of our media partners use Connect to offer their inventory to Xaxis. That was our first foray into moving further down the stack into publisher tools.
What’s the future of your direct-to-advertiser business?
There is an undeniable trend of digitally savvy advertisers wanting to get as close to media owners as possible. The industry looks at that and says, agencies are losing their leverage in connecting advertisers to media owners. I don’t think that’s the case. Advertisers are going to have a very difficult time building what the market now calls a trade desk. The notion that the technology is making it easier to find your audience across all addressable channels is false. The technology is opening up many possibilities, but it’s now harder than ever to find an audience and unify that audience across digital channels.
Even digital advertisers are going to need help, both from a platform and service standpoint, to connect effectively across an increasing number of addressable channels. The new Xaxis can both help agencies by providing that platform so that the agencies can be more effective, and for very digitally savvy advertisers with a focused set of objectives, we can help those advertisers as well.
What about encouraging outside agencies – not in the WPP family – to plug into Xaxis?
Absolutely. In 2014, we are going to be much more acquisitive in the marketplace because we’re creating products that combine the highest quality inventory with proprietary data using the largest group of audience specialists in the world. And we’re going to deliver advertising through our own proprietary formats. The vision for Xaxis is not to be a trading desk, but rather to be a platform advertisers can use to connect to audiences.
We very much expect that advertisers will engage with Xaxis through their agencies, whether WPP agencies or not.
Xaxis is known for doing advance inventory deals with publishers. Those will continue?
Scale matters in programmatic media buying. The misnomer is that you can buy impressions at auction and therefore there is no need to leverage scale. Nothing could be further from the truth. If you are one of the world’s largest advertisers, you don’t want the impressions that are available at auction because you are competing with all of your direct competition, but also with the small business on the street corner. You want to use your leverage both as a buyer and as a data company to gain access to the highest quality inventory. The fact is, publishers are very willing to offer high quality inventory to large advertisers at fair market rates. In many cases they want commitments on that inventory. The product we’re offering to advertisers – high-quality inventory combined with proprietary data – necessitates us having forward contracts with publishers.
What’s the state of 24/7 Media’s publisher network business?
24/7 represents over 1,000 publishers in 12 markets and serves 1.5 trillion impressions through its ad server. It’s a healthy and robust publisher ad-serving business and publisher network business.
If you took Xaxis out of WPP and made it a standalone company, who would be its one or two most direct competitors?
Our most direct competition comes from the other large holding companies. But there are companies in the DSP space that instead of offering software offer a full range of services that are competitive with us. And there are companies that have a platform positioning that are actually large ad networks that are also our competition.
I won’t name names because you know how this industry is. Everybody’s a frenemy.
