Home Agencies WPP H1 2016: Xaxis Grows Rapidly Despite Transparency Drama

WPP H1 2016: Xaxis Grows Rapidly Despite Transparency Drama


wppXaxis, despite scrutiny of its principal-based buying methods in the ANA’s June report, will grow at a forecasted rate of 25% year over year, WPP said on an investor call Wednesday.

Based on the holding company’s H1 earnings report, neither WPP nor Xaxis have yet taken a major hit from the ANA’s findings. Advertising and media investment management performed the strongest among WPP’s sectors, bringing in $2.07 billion in revenue over the quarter, up 12.4% sequentially.

WPP values Xaxis at $2 billion to $3 billion and forecasts the company’s billings at $1.1 billion to $1.9 billion for 2016.

Despite Xaxis’ solid performance, however, more WPP clients are moving their programmatic buying into WPP’s agencies for increased transparency.

The shift seems like it could undercut Xaxis’ growth, but it could also represent WPP moving more client budgets to digital buys across the board, said Pivotal Research analyst Brian Wieser.

“WPP can continue to take more share of clients’ spending into digital platforms in general, some of which can go to Xaxis, some of which can go to alternative programmatic vehicles,” he said. “There’s nothing stopping an advertiser from using their agency for a lot of buying and using Xaxis for other parts.”

Based on the earnings, the ANA’s transparency wake-up call has actually worked in WPP’s favor. The holding company now has more programmatic expertise and buying options across its agencies, rather than just at Xaxis.

“The fully transparent option is growing rapidly and the nontransparent option is growing rapidly,” Wieser said.

WPP also said it will benefit from Brexit’s weakening effect on the British pound for at least a year and a half. That’s because the holding company makes 85% of its sales in foreign currencies. The pound has dropped 12% against the dollar since June 23, the day before the vote took place.

Overall, WPP’s revenue was up by 5.2% year over year this half to $9.4 billion. It’s the fastest quarterly growth the holding company has seen in two years, Wieser said in a report. Organic growth for the quarter was hindered by Kantar, the WPP’s data investment management arm which saw like-for-like revenue fall 0.4% to $652 million.

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