Opinion

Xaxis Asia Pacific boss Michel de Rijk on what success looks like in an exploding market, arbitrage and the day TV will be bought by machines

Michel de RijkMichel de Rijk is Asia Pacific managing director of Xaxis, arguably the region’s most powerful agency trading desk.

In this interview with Mumbrella Asia editor Robin Hicks, de Rijk talks about a business that has grown by 700 per cent in two years, the tricky issue of arbitrage and the not too distant future when television will be bought by machines.

Xaxis is growing at a ridiculous rate. But so is the market overall. How do you know what success looks like?

I don’t look at what our rivals are doing. To be honest, I don’t see them as competitors. That might seem arrogant, but we’re an agency trading desk for GroupM and advertisers won’t switch media buying groups because of the trading desks the group uses. Talk to Grace (Liau, GM at Vivaki’s trading desk Audience on Demand) or Matt (Harty, until recently the APAC GM of Omnicom Media Group’s Accuen) and they’ll say the same. But we’re still here to grow the market.

Since Xaxis launched in Asia on 12 March 2012, the day I started, we’ve been building out from Australia to the rest of Asia. In those two years, we’ve grown by about 700 per cent; from three people to just under 200 staff.

So what makes Xaxis better than its rivals?

When WPP launched Xaxis, they really made an effort to launch an individual company in its own right. I’m not sure I’m seeing the other groups doing that. We’re building the technology, and investing in building the operations, and I’m not sure the others have shown the same dedication. Programmatic is usually the far more efficient way to trade media, but you still need to invest in the technology and people.

Xaxis just opened an office in Beijing. So how far towards completion is the Xaxis growth plan?

We’re almost there. We’re in 13 markets with 16 offices. We haven’t launched in Japan yet, but we’re running a lot of business for that market out of Singapore.

We may not launch everywhere. New Zealand and Sri Lanka are not on our roadmap. These markets are not ready for it, and GroupM can service New Zealand out of Australia. Expansion for us is about focusing on newer products and a deeper service offering rather than geography.

You get your business from GroupM. But why not look beyond the group for new clients?

That’s a big opportunity. In some markets, we’re looking at that. But there’s still so much growth within our own agencies, and it’s critical for us to get our own house in order before we go to clients outside of GroupM.

Why doesn’t GroupM use different agency trading desks for each of its agencies, MEC, Maxus, Mindshare and MediaCom? Wouldn’t that competition be healthy?

There is a common misperception about Xaxis, and that is that it is a guaranteed item on a GroupM media plan. We are not. Our sales teams go into agencies and explain why programmatic works and why Xaxis can benefit a campaign. If it doesn’t perform, we’ll be kicked off the media plan. We’re still fighting for a proportion of the media budget like everyone else.

Are clients right to be so worried about arbitrage (a lack of transparency over how much money a media agency is making on online media trading)?

Some clients – mostly Asia-based clients – are not worried. It’s only some global clients that are. And it’s a debate that’s been blown up by a handful of them, and journalists have been good at picking them out and interviewing them about it.

In my view, the arbitrage issue has been made bigger than it actually is. If it’s a concern for a client, then they should look at a different business model. Media is increasingly about ROI, and it shouldn’t really matter how you achieve that, whether the margins the agency makes are disclosed or non-disclosed.

Do you think that more clients will take programmatic trading inhouse in the future?

Look at what happened with online search. Some clients took it inhouse, but they soon realised that it is complicated and outsourced it again. I think the same will happen with agency trading desks. It’s a specialism and it’s very difficult to run a good campaign. I’m really curious to see how the advertisers that took it inhouse are faring in six-12 months, if they’re still doing it at all.

I gather you’re not a fan of the term agency trading desk? Why not?

For me, an agency trading desk is nothing more or less than a function that uses technology to buy media in a programmatic way. It’s an efficiency. The biggest problem I have is that programmatic is being used in the wrong way. As an industry, ten year-old buying tricks are being applied to a new platform. The ad network approach is still being used, where we buy cheap CPMs, spray and pray and hope that it converts. But the true genius of programmatic is cherry-picking the exact impressions you want to buy for your campaign. That is the best feature of programmatic and where the future lies.

Growth in the sector is fast now. When do you feel that it will start to flatten? 

Programmatic is known primarily for the growth of online video. But the addition of other media types will mean the industry will keep growing at an exponential rate. If we agree that display, video and mobile will grow exponentially for the next three to five years, then you have to believe that television will be traded programmatically three to five years beyond that. We already have the technology to do it, but right now we do not have the scale. The moment that happens, a whole new world will open up for the media industry.

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