WPP is merging its 24/7 Real Media business, which represents online publishers, with its own invention, Xaxis, which buys ad impressions in bulk and then, supposedly, targets them at the right audience.
At least that’s what I think it does.
The move seems intended to position the new unit, called Xaxis, as a one-stop marketplace for both sellers and buyers – with WPP taking a bigger cut as it hopes it won’t have to share commissions with other purveyors of online ad technology.
It may also be an attempt to grab a bigger share on the booming online ad marketplace before advertisers introduce their own systems. After all, if what once used to be ad agency group can create a big, people-free trading system, what’s to stop the likes of Unilever and Procter & Gamble doing the same?
Current Xaxis CEO Brian Lesser will run the new, presumably improved, Xaxis. Lesser (left) says: “Scale does matter in programmatic media buying. If you want to bypass the auction and go to publishers you want scale in buying power and in data.”
Here’s Lesser explaining (some of) what Xaxis does.
WPP bought 24/7 in 2007 for $649m, which must be close to $1bn in today’s money. Opinion will be divided on whether or not this was a good deal, given that 24/7 is now to disappear. WPP would no doubt argue that 24/7 remains a key component of what it’s doing now.
Another reason for the change may be the impending Omnicom/Publicis merger which will actually marshall more media buying power than current leader WPP although the operation is not as well organised. WPP boss Sir Martin Sorrell probably thinks he can move his online media offering an important stage forward while POG (as he likes to call it) tries to make sense of its multifarious media assets which include about ten media agencies (including the recently-acquired 75.1 per cent of Walker Media in the UK) and Publicis Groupe’s VivaKi digital media offering.