"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