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When Xaxis global CEO Nicolas Bidon talks about his company, he talks about becoming an "outcome" media operation. As part of WPP and GroupM, Xaxis is a billion-dollar business—arguably the world's largest programmatic media and tech platform—boasting some 3,000 clients across 47 markets. The evolution to an outcome-based focus, Bidon says, represents a shift away from traditional metrics like CPMs, which he describes as crude, to more specific business goals—all with an assist from emerging tech like artificial intelligence.
In this interview, taken from a recent "Ad Lib" podcast and edited for space and flow, we get into all of that, plus the weedier aspects of transparency and FBI investigations.
Xaxis is sort of a black box. Can you explain it for folks who don't know it?
What we do is to try to deliver what we called specific digital outcomes for clients, in a way that you cannot buy those outcomes in the market. If you look at how most of the media is still bought to this day in digital, it's relying on very old metrics. So things like CPMs, which I think were created in 1994, so not exactly new, and really which are based more on delivery, not tied to, "was this an effective use of my ad budget?"
There's sort of this idea of Xaxis as a trading desk. Is that an oversimplification?
It's a bit of an oversimplification. For instance, we have part of our offering which are more prepackaged solutions. We have part of our offerings which are more akin to services, and we have a pretty wide range of business models underpinning all of it.
In the old days, the media department of an ad agency would buy media for a client, earn a 15 percent commission, and everything would be transparent. Now things are a lot fuzzier. In the case of Xaxis, you are buying media as a principal and essentially reselling it to clients, making a profit on the transaction that isn't always clear to the client.
I would agree with that characterization, because if you look at what we're doing, and I want to be very clear about this, is we're not just reselling media. What we're doing is using media as one of the core element of what we do, and then leveraging our technology, leveraging data, leveraging our expertise to transform it into something that we think is much more tied to a client's specific outcome.
So there's a list of services. Transformation, consulting …
When you say reselling media, it sounds like we buy media, we put a markup on it which is not transparent, and then we resell it with no value added, which is obviously very far from what we do.
Xaxis was also the first to come out and say you would do principal deals and arbitrage, take it or leave it. How have brands reacted to that?
We guarantee the best potential supply for our clients, and we also can leverage the trade and the size of our cumulative book of business to secure better rates, of obviously one of the key raw ingredients, which is media. Because we have that model of transforming what's sold on a certain metric into something else, that we can take that financial risk up front, and then resell outcomes closer to our client's business on the back end.
Did it solve the whole transparency problem?
It cuts a little bit through the noise of transparency when it can be shown as accountable. Again if you agree clearly what's the value you're going to deliver to me, and can measure that value, the whole discussion about what's the cost of all the different ingredients, what's the margin in the middle, et cetera, I think becomes less important.
People who I've spoken with in this space have characterized you guys as slightly an opaque marketplace, but you're promoted as brand-safe.
All of our clients can see post-campaign delivery reports, which clearly shows where their impressions ran, and we have the utmost confidence that we do not show ads in places that are either fraudulent, or that could put our client's brand at risk.
How?
We work with very premium luxury brands—watches that cost more like $30,000 a piece—who want to keep that very high end, contextual environment. And so we have a very short whitelist of sites that they approve, if you want, as part of that. And on the flip side, we work with people that are maybe more performance-oriented, and that therefore a little more open, as long as it's brand-safe and fraud-free, to work with more long-tail type of publication.
Is there any backlash that you're seeing to surveillance advertising? Do you see outcomes requiring one-to-one targeted advertising?
What's interesting is, in a way, this focus on outcome has liberated us a little bit. It has enabled us to do is to leverage many other things that can drive performance, whether it's time of day strategies, whether it's contextual strategies, or supply optimization, to deliver the outcome. And audience is just one vector that can drive performance in certain cases, but it doesn't have to be.
The FBI is conducting an investigation into concerns of allegations that agencies engaged in non-transparent practices including cash rebates for media, vendors not passing them along to clients. Have you guys heard from the FBI? Have you been subpoenaed at all?
I haven't heard anything as far as Xaxis is concerned, and nothing that I can talk about, because we haven't heard.
Has the trend of marketers taking programmatic in house affected you negatively at all?
We haven't lost a lot of clients because of in-housing, but we've certainly see a lot of inquiries, so to say, from some of our clients in terms of asking us, "How can we, if we want to go down that path, what are some of the pitfalls? What's realistic?" One of the next opportunities of growth for Xaxis will be to leverage all the expertise we have from being specialists in the space for the last seven years, and package it into specific consulting engagement, or even training.
You don't worry about putting yourself out of business by telling them how to do it?
No because the biggest misconception is that programmatic is easy.
