Online advertising runs on data, which is why a core piece of the value chain is the data management platform, or DMP, which allows brands to combine their own data with other sources for more accurate targeting.
WPP's programmatic unit Xaxis has spent $25 million building one over the past 12 months, and is now offering it to clients.
"More than anything else, data provides leverage in a programmatic media buying world," said Xaxis CEO Brian Lesser in an interview. "The more anonymous data you have about a user, the more efficient you can be about your buying."
Since this audience-based buying is powered by a DMP, Xaxis decided to build one to fit its strengths. Called Turbine, the technology is designed to manage not only first party data (its own) and third party data (coming from outside sources), but "second party" data it collects directly from a number of publisher partners.
The publishers Xaxis works with share anonymous data about their visitors, enabling Xaxis to make inferences about a user's next moves based on similar users' past history. Collecting this data across publishers, the company can tell, for instance, which content consumption patterns make a user more likely to buy an airline ticket.
"What our DMP can do is not just look in the past, but also predict what you're going to do in the future, which for an advertiser is much more interesting," said Xaxis COO Mark Grether.
There were no pre-existing platforms that could handle this data to Xaxis' liking Mr. Lesser said. "What's on the market isn't enough to create the segments we can create," he said.
As to why publishers would be willing to share user data, Xaxis will manage over $750 million in ad spend this year according to Mr. Lesser, so there's plenty of incentive.
"Because of that scale, we're willing to make commitments to publishers on inventory and in many cases those commitments allow us to gain access to data that our competitors can not gain access to," he said.
The data will never be associated with specific publishers, he said, but rather collected in the aggregate.
With the new DMP, Xaxis will also have the ability to share data between advertisers who explicitly request to do so. But, Mr. Lesser said, "we as a rule do not share advertiser data."
Scott Neville, chief strategy and marketing officer at IPONWEB, an outsourced ad-tech development firm, said developing a DMP in house can offer significant benefits to a trading desk.
"Managing and selling audience data assets is absolutely essential to both the agency and trading desk business model," he said. "The ability to deeply customize how and what data sources are captured, scored, layered and attributed with other data sources to identify and unlock valuable niche segments, is ultimately what drives higher pricing, advertiser value and agency revenue."
"This also represents considerable IP," he said. "So taking developmental control of this essential asset to evolve unique differentiation and advertiser lock-in is really a logical step.
IPONWEB did not work with Xaxis to build the DMP.
The DMP was the primary focus of the company's 300 person engineering and data mining organizations, said Mr. Grether. This is the second DMP Xaxis has built, but the tech is far more advanced than the previous version, Mr. Lesser said.
"We consider it to be the most important part of the technology stack," he said.