Xaxis, meet 24/7 Media.
WPP is merging two tech units in a bid to act as middleman between publishers and advertisers as they increasingly move budgets to "programmatic" advertising, where ads are priced and bought in real time, often cutting agencies out in the process.
Xaxis was founded within WPP in 2011 to buy ad impressions in bulk and then add value by applying client data to help advertisers find the right person at the right time across the web. 24/7 Media is a collection of publisher-side technologies acquired for $649 million in 2007.
The merger will create a combined group under a Xaxis umbrella, which will completely absorb the 24/7 brand and take on its ad server technology and ad network spinoff Real Media Group. Last year, 24/7 Real Media rebranded to 24/7 and split into the two separate groups .
Xaxis CEO Brian Lesser will be CEO of the larger group consisting of around 800 employees. David Moore, chairman and CEO of 24/7, will become chairman of Xaxis and take on a dual role as president of WPP Digital.
The idea is to streamline the programmatic buying process by connecting sellers publishers and advertisers through Xaxis with fewer intermediaries, including ad tech companies that help publishers build new systems to sell their inventory.
Advertisers are increasingly buying directly from publishers and cutting agencies out of the process using technologies like DSPs. Likewise, publishers are beginning to offer more inventory through automated technologies to fullfill growing demand.
"What Xaxis is doing as a programmatic platform is synergistic with what 24/7 is doing, representing publishers' inventory," said Mr. Lesser. "There's a trend of advertisers wanting to get closer to publishers. They want premium inventory."
The combination of 24/7's products and global operations under Xaxis will give the combined entity more access to publisher inventory and data at scale, important as digital advertising increasingly becomes a scale game and just as WPP's biggest rivals, Publicis and Omnicom, are set to merge.
It will also allow WPP to allow advertisers to buy programmatically directly from publisher inventory, rather than go through an exchange.
"Scale does matter in programmatic media buying," said Mr. Lesser. "If you want to bypass the auction and go to publishers you want scale in buying power and in data."
It will also allow WPP to keep more fees once spread around a disperate and complex ad tech ecosystem, particularly with global ad deals.
"[Xaxis] might be buying through another publisher technology [globally]," he said. Now, Xaxis doesn't have to share the revenue on that transaction with an intermediary which might have or might not have been 24/7.
While Mr. Lesser said that the merger of Xaxis and 24/7 is not a direct response to heightened competition from ad tech vendors and clients doing programmatic buying on their own, he did say it'll help the holding company better position itself to compete.
Xaxis will continue to compete with with those companies as well as do business with them for both WPP and non-WPP clients. As part of a restructure, 24/7 President Nicolle Pangis will take on the Xaxis role of chief revenue officer. She'll work with regional leads to make sure Xaxis is "driving revenue across agencies, inside WPP and outside of WPP," Mr. Lesser told Ad Age.
With its largest concentration of ad dollars in the world, WPP can boast efficiency for its clients. But the idea of having one company handling clients on both the buy and sell sides is bound to make some advertisers and publishers nervous.
WPP isn't transparent about its cost of media to advertisers, meaning it could tell a publisher client it will price ads and then turn around and sell them to an advertiser for a higher price. Such criticisms have been leveled at other companies that span buyer and seller, like Google, but without evidence of actual foul play.
Xaxis is used to fending off critics that decry its arbitrage model.
"The conflict arises only when intermediaries obscure the transaction such that publishers feel they are not receiving proper value, and advertisers are not clear on what they have purchased," Mr. Lesser said. "One platform reduces conflicts because advertisers and publishers can connect directly through a trusted and objective third-party."
Contributing: Tim Peterson