Blog Post

WPP Launches Xaxis Unit, Dedicated Solely To Audience Buying

WPP Group has launched Xaxis, an in-house data management platform that will allow its media buying agency Group M to provide audience targeting in a more direct way than it has before. The acquisition builds on the growing focus on ad exchanges and buying through agency trading desks, which WPP has been working on for over two years.

Audience buying, as opposed to paying for placement on distinct websites that appeal to certain demographic groups of consumers, is increasingly the preferred way of advertising online among marketers. “DMP” has become the hot online ad acronym this year, attracting the kind of interest and fascination that DSP, or demand-side platform, did last year). And that represents yet another challenge for publishers and their direct sales teams.

For years, WPP has built up its portfolio with a ceaseless pursuit of digital acquisitions. Xaxis will rest on the shoulders of a number of the pieces that WPP added to its holdings, B3, targ.ad, GoldNetwork, GroupM DSP and the GroupM Marketplace. In 2010 alone, the businesses that have combined to form Xaxis executed approximately 4,000 campaigns for more than 400 GroupM clients.

Xaxis will be run by CEO Brian Lesser, who previously served as global general manager of the Media Innovation Group (MIG), WPP’s digital marketing technology company.

The move toward audience buying as part of behavioral targeting has been accelerating the last few years. The idea — and the threat to publishers — is that shoppers for food, cars, packaged goods and every other category are available all over the web, and if you can find those specific consumers you want to reach with your ad message, why not do that instead of buying space on a website as if it were a magazine or a newspaper or a TV station.

Of course, well-trafficked sites like the NYTimes.com (NYSE: NYT) and Huffington Post — or apps — will always be worth advertisers’ time for branding campaigns, but when it comes to driving direct sales and immediate ROI, marketers could care less about the popularity of a site; they want to get consumers who are in market and for that, audience targeting is the way to go. Increasingly, the way to do that is through real-time bidding networks and exchanges.

WPP Group and its ad holding company rivals — Publicis Groupe, Interpublic Group, Omnicom — have all set up trading desks for ad exchanges, which allow them to more easily avoid publishers’ direct sales teams. For years, WPP and its rivals were content to work with third parties who provide audience buying and targeting. With the introduction of Xaxis, though, WPP is making the next step by competing directly with the startups that provide audience buying services. In the meantime, startups are upping their game as well. Earlier today, online marketing firm ChoiceStream launched a custom ad targeting platform called Crunch (more details here).

At launch, Xaxis will have a presence in 11 countries across North America, the UK, Europe and Australia. It has plans to expand into additional markets later this year.

Xaxis collects audience information across a near-infinite variety of online and offline channels, now that it’s possible to track consumers’ media habits through print and TV (though that’s not as exact as online — yet).

WPP’s pitch to advertisers is simple: By reaching only the most relevant audiences through a range of display advertising, mobile ads, video ads and paid social media, “Xaxis delivers dramatically improved performance at lower cost than other industry solutions.”

Now that WPP has officially launched its DMP, expect Publicis, it’s closest rival in the race to expand digital media buying, to trumpet its own capabilities in this area. But first, the big question is whether WPP can out-compete established DMPs and audience targeting companies with its own unit that will sit alongside its traditional ad buying and planning businesses. Given WPP’s aggressive approach to digital and its command of billions in global advertising dollars, it is very likely the independent companies in the space will be even pressed to develop newer, more comprehensive services. Release