Xaxis global president: ‘There is no consistency and too many players in programmatic buying’

As WPP’s programmatic buying giant Xaxis rebrands as an ‘outcome media company’, global president Nicolas Bidon talks to Eleanor Dickinson about viewability, 'massive' ad fraud in China and why the company will continue to use its arbitrage model despite mounting debate about transparency

How exactly is Xaxis going to rebrand itself and why has the agency made that step?

“We’re launching what we believe is a stepping stone that the programmatic industry will evolve towards over the next few years. We want to create a new category called the ‘outcome media’, where essentially you’re able to trade on the specific outcome as a brand, rather than using derivative metrics like ‘Cost per thousand impressions’ or CPMs. The first of these will measure viewability.

“This is the first currency we want to trade on, but we will continue to roll out additional ones. If you’re looking at engagement like hovering over an add for a period of time, we want to develop an algorithm to measure the accuracy, the impressions in the ecosystem, and allow you to trade with us on that. As such we now want to be known as an ‘outcome media company’.”

Why is viewability the first currency you’re trading on? And can you really guarantee it for advertisers?

“Everybody is trying to [improve viewability], but it’s still a very manual effort in the way it’s measured. Everyone is trying to optimise towards a viewable impression, but nobody can guarantee they will deliver 100 per cent viewable impressions. For us, the whole idea is that you only pay for 100 per cent viewable impression. If you’re using a trade desk or AppNexus or any of the DSPs out there, you can put your bidding price, and our data will predict the likelihood of that outcome and deliver only that impression to the buyer – so we guarantee 100 per cent in that sense that you will not be charged if it’s not meeting that criteria.”

Is this new currency being rolled out in Asia?

“We’re releasing this in eight global markets, which include APAC. We also had a meeting with the Singapore Investment Board to look into how we could leverage some of their incentivisation schemes for machine learning and AI. It’s something we’re investing in heavily as we use a lot of data and try to predict the value of every impression. Most of our engineers and data scientists are based in the US. However, we feel there is a lot of potential in Singapore for talent we could use. We want to know if this is a place to invest in terms of building a practise here.”

Xaxis has come under fire over the last few years over its non-transparent or arbitrage business model. Is that model still sustainable given the greater industry scrutiny on this practise?

“I wouldn’t say we have a non-transparent model. I would say we have a non-disclosed model, but we’re very transparent about that. But where we want to go with our outcomes, so say cost per completed view per video or in-target reach, tend to be calculated by our clients and not us. We’re measured by their ad-servers or third-party measurement. I believe the debate on transparency and margin will tone down a bit when people realise that they can benchmark the value they can get from different models.

“The issue the industry has had is that there has been lacking a consistency of measurement in video – there were a lot of debates about Facebook inflating their metrics. Everyone has their own metrics – YouTube, Facebook, broadcasters – so it becomes very complex in terms of the ROI. But if we give clients outcomes they can consistently measure, we will get away from this religious approach of ‘you can or you can’t create a marginal opportunity for yourself’; as long as we can show that despite the margin we will create for ourselves, we can create better value for our advertisers.”

Do you think your rebrand efforts will actually reassure advertisers or do you still foresee questions about transparency and accountability?

“I’ve been at Xaxis for five years now and the debate has been constantly evolving for some time. Our business – which will not change – is not to disclose the margins because often we can make a lot of upfront commitments to media vendors under the proviso that we cannot disclose the pricing we are getting. We do this because we take an upfront risk by pre-buying large chunks of what we think is the most valuable inventory and because we can get better prices through the scale we have. We absolutely do [take more risk than other media companies].We take the risk on building those data deals upfront, media deals and building our own technology. We do whatever it takes to meet a client’s outcomes, which is why we have the risk and why we have that business model. That differentiates us from the more itemised, and transparent approach, that doesn’t necessarily deliver the same value.”

Recently, the CEO of Hearts & Science Scott Hagedorn said he felt the ad industry had ‘poisoned programmatic thanks to a lack of transparency’. Do you agree with him at all?

“It’s a little over-dramatic. But in every market you have good actors and bad actors, and you get those who leverage programmatic as a cash cow. That’s not acceptable. We have all read stories about fraud and brand safety. Fraud is a massive issue is China and there is no standard for what is fraud or not. There’s no accreditation body that measures how we control fraud – it’s a bit of a Wild West still. And if you roll back five years ago, there were a lot more bad actors in many markets. In terms of brand safety, we have had a very tight whitelist.

Scott Hagedorn at Mumbrella360 in June

“It’s true that at the beginning there was a lot of poor quality in the supply chain, but now we’re at a different maturity level. But the potential of programmatic is huge: it should be automated, it should be addressable and it will result in lower cost for buyers and better yield for publishers. Right now though, there is so much uncertainty in the marketplace that we are scaring people away from it.”

Recently there has been a lot of noise about the so-called ‘ad tech tax’ and its effect on publishers’ revenue. In your opinion, do you think publishers are getting a fair share of the pie in the programmatic exchange?

“More needs to be done and we do need to do a better job at this. The way to do this is to focus on the bad actors and weed them out of the ecosystem. That’s why we do these upfront deals with the publishers so we can give them the best deal.

“There are too many point solutions today. For example with viewability, there are three different parties paying for this: the publisher will have some viewability player to help them optimise an ad’s presence on their page. Then you have players like us – large programmatic buyers. And then the buyer will have their own contracted viewability audit measurement partner. It’s the same ecosystem, but three actors are paying for viewability measurement; that doesn’t make any sense to me. But I believe that will consolidate and will create more marginal opportunities in the margin chain to redistribute to the right actors. We are already seeing consolidation and we will continue to do so.”

What’s the relationship between Xaxis and mPlatform? How integrated are you and are you well differentiated enough so it’s not confusing for clients?

“It is confusing right now for clients; we’re trying to do a better job of clarifying that. Quite simply mPlatform is two things: it’s creating the single view of the customer. We have a lot of agencies and data stacks in GroupM. You have different engineering products that are overlapping, and if you don’t have a Rosetta Stone that can translate what we know about a customer in one agency, but not in another, then you cannot connect the dots. You leave value on the table for advertisers because you’re not frequency capping. mPlatform is about creating a single ID which ties in all the data points into one single customer. Xaxis leverages that ID, the same way that the programmatic buying unit or the trade desk we set up at Mindshare for Kimberly Clarke or Unilever uses it.”

Do you have any predictions for the how the programmatic industry is going to progress or change over the next few years or so?

“An interesting part of the market right now is audio. You’re starting to see traditional broadcast move into programmatic audio: Spotify, Pandora and our own business Xaxis Audio. Outdoor is very early days, but the adoption of digital screens makes it much more addressable, which means we will get some more automation. With addressable TV, it’s still a small portion of the market in the US, but it’s growing. There are things going on in the UK with Sky and Virgin.

“Fundamentally I believe more and more media will be digital, and therefore more addressable. I do think we will stop saying ‘programmatic’ buying eventually – just in the same way we will stop saying ‘online’ media. Now though you have 30 people in programmatic saying you need this; and then another 20 saying you need something else. You do not need all those solutions. That’s a problem the industry has created for itself. And that’s why we want to simplify the complexity of this ecosystem.”


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