All advertising in the future will go digital, and all digital buying will be programmatic, saysXaxis global chief executive officer Brian Lesser prophetically. Lesser should know. Xaxis, one of the youngest companies in the GroupM fold, has been leading GroupM’s foray into programmatic buying since the last three years, servicing over 2700 clients in 32 markets across North America, Europe, Asia Pacific and Latin America.Prior to founding Xaxis, Lesser was senior vice president and general manager of the Media Innovation Group (the MIG), a company he started in 2007. As the leader of the MIG, WPP’s first technology development organization dedicated to media buying and optimization, Lesser created the first integrated data management, targeting and ad delivery platform for media agencies. He was instrumental in creating the first and largest agency trading desk, the rapid success of which led to the formation of Xaxis. In this interview with FE BrandWagon’s Anushree Chandran, Lesser explains how programmatic buying scores over other digital media buying strategies, and howXaxis is focusing on developing mobile based products for the Indian market. Edited excerpts:
Can you tell us about Xaxis’s operations in India?
Xaxis India is two years old. We have nine employees in India and they work as a unit, but they also work very closely with our Asia Pacific hub in Singapore where we have 40 employees. Xaxis is a programmatic media and technology platform which connects advertisers and publishers to audiences across all addressable media channels through the expert use of anonymous consumer data, advertising technology and media relationships. We launched the business in India two years ago, and it was a very nascent market in terms of programmatic media buying. The ad serving technology is not as prevalent as some of the more advanced markets and this has made data collection and creation of audiences difficult. Our business two years ago was primarily a display business and very performance oriented but for GroupM’s clients. Our fastest growing business is Xaxis TV which is our online video business. Technology is much more prevalent in the market now and therefore the ability to collect data and create data segments is much better than it was two years ago.
How does Xaxiscustomise solutions for various markets?
Xaxis has a number of technologies and products.The products that we develop on the platform vary according to the market. In markets such as Germany and the UK, for example, the majority of our business is online video. Across Asia Pacific, it’s probably slightly more display than video. In the US, we have been very aggressive in developing mobile, digital, out of home and radio. In India, our focus is obviously on video which is very fast growing and a part of the advertising ecosystem. And given that it is such a mobile driven society, we are developing mobile products for Xaxis India.
Tell us how your product Sync works.
Sync is currently live in four markets. It is in the development phase in India and it will be launched in 2015. Sync is a product that allows us to serve advertising on a mobile device that corresponds to a television commercial. The problem we are solving is that if a consumer is at home watching TV, and a TV commercial comes, they get distracted and look at their mobile device whether that istheir phone or their tablet. We now have the ability to serve ads in real time that corresponds to the TV commercial.
Will all media buying eventually be programmatic?
Eventually, all advertising will be digital and all digital advertising will be bought and sold programmatically. At times, people confuse programmatic buying with real time bidding. Real time bidding is a subset of programmatic but is certainly not the whole of it. Ad inventory is available at an auction in an open market place and that primarily refers to display advertising and some video advertising. But these are only some aspects of programmatic. In the future, large advertisers will still have relationships with big media companies for a given market and they will negotiate deals so that their advertising appears in the most favourable brand safe environment. But they will buy that advertising and serve that advertising programmatically.Eventually, the process of sending an insertion order and reconciling things manually will evolve into programmatic but that doesn’t really mean that all media will be bought at an auction.
Why has WPP announced that it is pulling out of open ad exchanges?
Inventory is bought through an ad exchange and sometimes bought through an ad network. Clients ask us to give them leverage in rates in the media market place. We buy programmatically, but prefer it to be directly bought from the publishers. In an open exchange, there is no pricing advantage for large advertisers. If you are a large advertiser spending $100 million a year, you will probably get the same pricing advantage as an advertiser that spends $100 a year. This is precisely what is wrong with the open ad exchange model. You may have a data advantage because you gathered more data. But I do think that it is easier for an advertiser to control pricing and control where their ad is placedif they work as closely as possible with publishers and not through open ad exchanges.
How much media is bought programmatically? Which are the companies that have embraced it well?
If you were to look at digital media budgets, programmatic comprises 10% of digital media budgets within very advanced markets. It is around 5% in less advanced markets. Although programmatic is a small part of media buying in India, it is expected to advance very quickly. India can learn from the mistakes that publishers have made in other markets. They can control pricing and buyers through programmatic.
Facebook has done a lot in the programmatic area. They are one of our partners. Yahoo is one of the original
innovators in the programmatic space. News Corp has made a very public effort to push its business into programmatic.
How do you think native advertising will pan out?
I think that native advertising is an effective mechanism for publishers to monetize audiences and for advertisers to reach out to those audiences. Too many display ads are ignored by users. This is because the targeting is not very good, and in many cases, the creative is not very good. Native is a way for publishers to offer information in an unobtrusive fashion. It is also perfect for programmatic because not only can we target audiences depending on their profile or their segment, we can tailor the creative to the audience and literally manipulate what is there in the creative unit. I do think that native is a great innovation and will lend itself very well to programmatic.