The CEO of WPP's massive advertising trading desk Xaxis explains the 3 biggest myths about his company (First up -- it's 'not a trading desk')

Brian lesserXaxisXaxis CEO Brian Lesser.

Xaxis is the programmatic media platform within the world’s largest advertising agency holding group WPP that is projected to manage $US950 million in ad spend this year across 40 markets.

The division was formed in 2011, but CEO Brian Lesser told Business Insider there are still a number of huge misconceptions about what the company is, what it does, and what it wants to be in the future.

Over the course of our phone discussion, he attempted to dispel a few of those myths.

MYTH 1: “Xaxis is an agency trading desk”

Ask most people within the ad industry what Xaxis is, and they will probably respond: “An agency trading desk.” That is, a centralised operation within WPP that manages its clients’ and separate agencies’ programmatic (or automated) advertising buying. Other examples within the industry include Omnicom’s Accuen and Publicis’ VivaKi Audience on Demand platform.

But Lesser says Xaxis is more of a media company.

“We are not a trading desk. A trading desk is a service an agency provides that is disclosed and acts as a filter for all programmatic media. If I’m an advertiser, and I spend $US10 million in programmatic, I would rely on a trading desk to advise me on that $US10 million, like what DSP (demand-side platform) to use, inventory, and data services.”

While Xaxis still does that to some extent for some clients, Lesser said it tries to build the actual line items that go on the media plan. For example, it recently created a product called Xaxis Sync that allows advertisers to sync advertising served to a mobile device with what is happening at the same time on TV.

Agency Trading DeskLUMA PartnersThe infamous online advertising LUMAscape.

MYTH 2: “Xaxis is not transparent about what clients are paying for”

Xaxis often takes a lot of heat from the industry about the way it prices its products to advertisers. Xaxis doesn’t break out what proportion of marketers’ fees went to buying ad space, and the percentage that went towards human resources, data, and technology. Publicis’ VivaKi AoD, on the other hand, claims that it does break out these figures if marketers ask for them.

Lesser thinks Xaxis is at the end of undue amounts of criticism on this issue because Xaxis is “very good at what we do.”

“We invest more in technology than any other agency, so when we are compared to Publicis’ AoD, that’s like apples to oranges. That’s a trade desk, they have no [internal] tech, they rely solely on third-party tech. They are happy to surface the cost of their inventory because they don’t trade the way we do. I think as a result, they don’t provide nearly as much as we do,” Lesser said.

Xaxis invested $US25 million in building its data management platform (DMP) Turbine last year, for example, which Lesser says makes it difficult to break down that investment client-by-client.

In addition, Xaxis negotiates big trade deals with publishers, which Lesser says disables his company from exposing that pricing to clients — Xaxis is leveraging a better deal because of its scale (the number of advertisers it works with) than the types of pricing its competitors might be able to get.

And Lesser said that all the advertisers it works with understand the model, sign up to its model, and they can opt out at any time.

MYTH 3: “Xaxis is just an online advertising company”

US programmatic ad spending on digital display ads is set to grow 47.9% to reach almost $US15 billion this year, according to eMarketer. That figure includes banners, rich media, sponsorship, video, and other ads seen on desktop computers, mobile phones, and tablets.

For Xaxis, more than 50% of its revenue already comes from video advertising, one of the fastest-growing segments in online advertising. But the next five years are going to be transformative, according to Lesser, who said he is planning for Xaxis to “primarily be a mobile company, and a TV advertising company.”

By 2019, IPG Mediabrands’ insights unit Magna Global predicts $US10 billion will be spent on programmatic TV advertising in the US by 2019, representing 17% of the total.

Lesser admits there are a few hurdles to overcome before the industry gets there: TVs will need to be connected in order to allow for the automated ad buying processes to work, broadcasters will need to co-operate, a mechanism to serve the advertising will need to be created, new measurement tools will need to be developed, and the economics will need to be right and beneficial for all parties.

“We are going to get there slowly. It will take longer to meet the challenge of TV than it did with display. There’s no doubt that consumers and young consumers are watching less of linear TV (TV as it is scheduled.) However, it’s still a very effective channel … it’s still a massive reach vehicle and TV content is getting better, and it remains a very effective medium for advertisers,” Lesser told us.

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