By Tim Bradshaw and Digital Media Correspondent
WPP, the world?s largest marketing group by sales, has created a unit for buying digital media, a one-stop shop for targeted, mobile and social network advertising that will directly compete with products from Google and Microsoft.
Xaxis, the subsidiary, combines several technologies and acquisitions from across WPP to allow advertisers to target specific demographics and build up anonymised profiles of would-be consumers.
Big ad groups are striving to grab a larger share of the fast-growing online advertising market by making a fragmented market more simple, compared with traditional media such as television. Many of the world?s biggest advertisers are also looking at consolidating their marketing duties in fewer, larger agencies.
The creation of Xaxis follows digital media initiatives from Publicis and Omnicom, WPP?s rivals. Publicis formed Vivaki in 2008, while Omnicom has announced partnerships with technology companies such as Google, AOL, Microsoft and Yahoo – all of which offer their own digital media buying tools.
WPP claims it can differentiate its products by using in-house technology, such as 24/7 Real Media, the digital ad group that it bought for $650m in 2007.
?We took a fundamentally different stance in this space than our traditional agency competitors,? said Brian Lesser, the Xaxis chief executive who joined WPP when it bought 24/7.
?We thought it was very important to have proprietary technology because we are better able to control our advertisers? data and to manage different solutions.?
Ad agencies are grappling with how best to work with internet companies, as they balance the opportunity of sharing in their more rapid growth with the risk of being removed from the business chain through disintermediation.
Sir Martin Sorrell, WPP chief executive, likes to call Google a ?frenemy?, reflecting its dual role as a competitor and customer. Google?s in-house Creative Lab won awards at last week?s Cannes Lions advertising festival, where technology companies including Microsoft, AOL and Facebook were more prominent than in previous years.
Mr Lesser said Xaxis would work with third-party technology companies, but said: ?We are much better suited to offer competitive products that integrate with what our agencies are doing … Google is a great partner of ours but we don?t rely on their full technology stack the way some of our colleagues at other agencies do.?
This allows the group to be much more objective in where it buys media and how it provides insights and analysis to its advertisers, he added.
Mr Lesser said Xaxis would be working with hundreds of GroupM?s large and small clients, and use data created by WPP?s Kantar market research unit to determine which audiences to target online.
WPP shares closed 1?p lower at 742p in London.
? The Financial Times Limited 2011