GroupM announced today the launch of a new global audience buying unit, Xaxis. Xaxis will look to centralise WPP's core technology and trading expertise so that it can offer its advertising clients the ability to target specific audiences and optimise campaigns across managed and dynamic supply. This is a significant development in the display marketplace - online, mobile and video. WPP accounts for more 30% of display buys in Europe alone. Xasis will incorporate the functions of businesses units including B3, targ.ad, GoldNetwork, GroupM DSP and the GroupM Marketplace.

Having actively hired publisher relationship staff, exchange specialists and ad ops, GroupM is building a formidable offering in the European and global market. It is attempting to ring fence its own source of premium supply before any one company tries to dominate with an end-to-end solution - and given its buying power in the marketplace it will be in a position to lock up the best supply-side data and inventory. So how will it fit into the existing GroupM framework? And how will it affect the current display market on both the European buy and sell side? Here Jakob Nielsen, GroupM Managing Director Interaction, discusses the new internal audience buying unit Xaxis, the shift in audience buying strategy at WPP and what it will mean for existing advertising clients.

Can you give an overview of the new Xaxis offering - and how it will fit into the whole WPP group?

JN: Under the ‘Xaxis’ banner, WPP have unified all the business units that were previously housed disparately within GroupM, 24/7 Real Media , WPP . The execution of this strategy has enabled us to bring together, in a strategically aligned and executionally coherent manner, all of our global demand-side products into a single global audience buying platform.

Xaxis is the world’s largest audience buying company. It is to use data and technology to enable our agencies to reach and engage with audiences at scale, and in the execution of these objectives, deliver highly efficient and optimized digital media, measurable value, dramatically improved performance, and actionable insights for our clients.

Specific products will be offered within the Xaxis business, using data, inventory and technology in different ways to create compelling, client benefit-led products

You had the MIG and GroupM Marketplace doing different functions within WPP. Will this all be managed by Xaxis?

JN: Xaxis is effectively already in operation, with various elements of delivery currently active as either B3, targ.ad, GoldNetwork, GroupM DSP or GroupM Marketplace.

These specific individual business silos will cease to operate and their benefits will be delivered through Xaxis, and within a new product architecture. All existing staff at these operations will transition into Xaxis, a process which began in May 2011 for the UK market.

Can you give some insight into what this new offering means for video? Is Xaxis busy locking down supply and data around online video display?

JN: Xaxis has been structured as a platform agnostic solution, enabling the products to be seamlessly migrated to emerging media platforms and devices, reflecting changing consumer behaviours in an increasingly connected ecology.

The principle of XaxisTV has been operational in the UK since December 2010, and has already secured inventory and access agreements with the majority of the UK video publishing community. GroupM clients who have participated in the initiative across this period have benefited from significant market advantages that this data driven solution has provided.

The delivery architecture underpinning XaxisTV has embedded dexterity to enable the solution to migrate to both mobile and connected TV’s as these markets reach critical mass.

Can you discuss the technology that underpins Xaxis – the agency trading desk, the DMP, 24/7 Real Media and B3? How are you going to make all this tech work together?

JN: Our Data Management Platform (DMP), powers Xaxis’ audience buying solutions. Xaxis enables us to implement a highly sophisticated data management strategy, with data centers in Amsterdam, Frankfurt and on the West and East Coast of the USA, as well as in Australia.

Our data and targeting platform is comprised of proprietary WPP technology, augmented by best-in-class technology partners. These partners will share in the success of Xaxis through incentives. This partnership programme will encourage the development of innovative software solutions.

All digital advertising technology will be managed by Xaxis so that it may be consolidated into a single platform integrated with other WPP technologies.

Is there an over-reliance from agencies on point-to-point solution providers? Do you think that this type of dependency will commoditise the agency model over time?

JN: WPP’s legacy of investment in technology, means that Xaxis is the only media buying company with its own proprietary technology tools (e.g. ad server, bidding engine, database, etc.). The solution leverages media directly from sites, portals, networks or exchanges.

Xaxis UK today deploys 24 professional, who have years of experience in working with technology, data and optimisation across Microsoft, AOL, Yahoo, Adconion, Exchangelab etc.

Other “trading desks” buying media via RTB DSP partners have access to RTB exchange media only. This limits their ability to dial up contextual, environment and content based parameters.

There are few people today who believe the agency model won’t change over time. Without ownership of technology and data, including experience in running smart optimisation and decision application, it will be difficult not to be commoditised as an agency.

WPP sees a lot of data in campaigns it runs across the UK market. How important is data in this new Xaxis?

JN: It is our opinion that there is nothing more critical in the media and marketing communities than the generation and rigorous analysis of data. At the core of the Xaxis business models is the collection, management and leveraging of data. This process empowers our constituent agencies, and their clients, to deliver market leading communications.

The sheer scale of WPP global media investment means that Xaxis’ proprietary database houses the world’s largest pool of audience data, reaching more touch points across the universe of addressable media (including display advertising, mobile devices, addressable video, digital out-of-home, paid social media, etc.) than any other in the industry.

Xaxis is the only “trading desk” that gives advertisers access to the benefits of audience buying (efficiency, scale, performance) without giving up on premium content.

As a GroupM company, Xaxis leverages GroupM’s long-standing and trusted relationships with the most premium publishers in the marketplace. No other advertising holding company’s trading desk has formed these relationships with publishers.

Is WPP trying to lock down supply and data so that it doesn’t become beholden to one dominant vendor in the display market? Is this a global strategy – or just focused on Europe?

JN: GroupM media agencies and clients have already benefited from the development of proprietary technology which has been developed to deliver their requirements. These technologies collect our client data across a mass of publishers and suppliers and as such our clients and Xaxis will not be dependent on any specific publisher or vendor in the markets. Though we buy ‘Audiences’ and not placement, we remain firm believers that many publishers have tremendous ‘content’ which we will look to avail. The delivery insights that power Xaxis will enable us to generate tremendous value for our clients. A strategy we have already implemented across several client the last 2 years in the UK.

How are you working with publishers? Will have managed supply from premium publishers? Are you paying for publisher data?

JN: Xaxis will benefit from inheriting pre-existing relationships, which all parties have worked to develop, spanning publishers directly, networks, Exchanges, SSP. Furthermore, we also currently work with data providers, content classification providers, dynamic creative ads providers, ad safe verification providers etc., all of which will be transitioned to the new company.

Does this mean that Xaxis will work with fewer ad nets going forward? What will the ad nets need to do/offer to work a WPP agency going forward? Will ad nets just become inventory sources for Xaxis?

JN: Ad networks are, and will remain, important sources of inventory for Xaxis. The application of our data powered audience insights will enable us to determine which Networks deliver the best inventory to satisfy our client requirements; this will entail a dynamic approach to inventory procurement, one that is determined by the ebb and flow of client demand.

Finding the right audience for our clients involves a process of understanding what that audience did in the past, what their intent is, and critically, what contextual environment they are currently visible within. Advertisers have plentiful data at their disposal, generated across different channels (Display, Search, VOD, Mobile, TV, OOH etc.), but we are also supplementing this by acquiring data from 3rd parties where it is relevant.

What is the motivation for implementing this strategy at WPP? Is it to make more margin?

JN: WPP has made significant investments in both building a data management platform, and technologies to ensure that we are able to engage with audiences directly on behalf of our advertisers. The delivery of best-in-market audience solutions will enable us to deliver better campaign performance, improve ROI, and therefore improve client retention and acquisition.

Our commitment to this initiative, as a key element in the future of our business, is reflected in the operational teams we have deployed today in 11 markets, all with strong industry and operational experience and expertise.

Running a business like Xaxis with all the incumbent benefits is costly and hopefully over the years we will generate a margin for WPP. We don’t see a problem in this. We are, like all other business, measured by our ability to generate profit for our shareholders and for the sustainability of our business.

Will clients get price and inventory transparency? What are the key benefits of this model for WPP advertisers?

JN: Xaxis Insight will give advertisers a suite of analytics tools that will shed light on underlying digital truths about audiences, media performance and value. An example of this is Xaxis Attribution, which optimises advertising budgets across all digital touch points. An advertiser can run an attribution report to establish the true ROI of each channel and move credit away from the channel or media owner that delivers the last click. Xaxis has a unified single tracking solution across all digital channels including the ability to apply mathematical analysis to produce attribution reports.

GroupM agencies have worked closely with their clients to ensure that clients have full transparency and compliance with the Xaxis business model and the way that data is utilised. Furthermore, there will be no client using Xaxis without their prior commitment.

Marketing directors across our client base have expressed excitement about the promise of Xaxis, and appreciate the value of owning and using their own data, powered by technology operated by experienced people, to significantly improve the efficacy of their digital marketing communications.

Xaxis benefits from the inheritance of considerable market experience. In 2010, the businesses that have combined to form Xaxis ran approximately 4,000 campaigns for more than 400 GroupM clients.

How difficult as an agency has it been to build the tech, resource and “political harmonisation” required for such a project like Xaxis?

JN: The most significant statement on the future of the media markets was WPP’s 2008 acquisition of 24/7 Real Media. Three years later, this investment remains the only agency group investment in proprietary digital technology. Amongst the myriad benefits bestowed upon the group as a consequence of this acquisition, GroupM agencies have essentially at their disposal an ‘in-house’ technology development team to develop custom solutions for their and their clients, requirements.

WPP is a company which is firmly committed to investing in the future, and is prepared to support necessary investment to make this group fit-for-purpose in an increasingly digitised media landscape. These investments manifest themselves at the forefront of media planning and buying and we sincerely believe this is one of the reasons many clients have chosen to work with us.

The Xaxis proposition will not only significantly impact internally at GroupM agencies, changes which we have adapted to accommodate, but more dramatically on the existing media businesses and practices.

Change can sometimes be difficult but I have seldom been involved in a project where there has been so much positive support within GroupM for the backing of Xaxis.