Programmatic Transforms The Ad Business

Originally posted on: Forbes | October 15, 2018

Programmatic advertising has dominated the advertising landscape for the past several years. The ability for marketers, typically through their agency partners, to bid on desirable target audiences across digital media platforms through computer trading systems is de riguer for most advertisers today, accounting for $63 billion worth of the total $216 billion in digital ads purchased worldwide in 2017, according to Magna Global. In the U.S., the percentage of digital ads bought through programmatic platforms is over 80%, according to eMarketer. One of the world’s largest organizations performing this function for marketers is the Xaxis division of GroupM, the world’s largest media investment group responsible for more than $113 billion in annual ad investment. On the occasion of Advertising Week in New York City, here is my interview with Xaxis’ CEO of North America, Matt Sweeney.

Matt Sweeney, CEO, North America, Xaxis WPP

Bruce Rogers: Tell us how Xaxis came about and where you see the business headed.
Matt Sweeney: Xaxis was developed out of 24/7 Real Media (the ad serving technology company acquired by WPP for $650 million in 2007) in conjunction with GroupM, who were one of the early leaders in the programmatic media space. I think that the folks at WPP and GroupM saw quite a long time ago that in media buying of the future, the advantage for marketers would be around data and analytics. And that media buying was going to be automated.
WPP and GroupM recognized the opportunity to build a center of programmatic excellence using the 24/7 asset and this was the genesis of Xaxis. So that's what happened. Xaxis built the first buy-side DMP (Data Management Platform) called Turbine, fundamentally a data activation platform where we could work with clients’ first party CRM data, our own data, and relevant third-party data in market as appropriate to drive campaign objectives. It powered incredible growth for Xaxis and continues to an enable our clients at Xaxis and across GroupM as part of [m]Platform.
Rogers: Where is the business today?
Sweeney: Today, we continue to develop our own leading technologies via the ingenuity of our data scientists and engineers. Three and a half years ago, we built a platform called Copilot, which uses artificial intelligence and machine learning to process huge amounts of data and executes multi-metric optimization. We analyze all the possible metrics which are acting as digital proxies for marketers to understand, say… when someone does these three or four things, either on my site or with content, they are closer to being a customer than folks that don't do these three or four things. So, this technology and AI allows us to go in deep with data, and most importantly start creating custom algorithms for big marketers.
Rogers: Given the challenges around a highly fragmented media landscape, and an increasingly complex consumer journey around marketing and media, how are you viewing that process, and how Xaxis plays a role in helping marketers?
Sweeney: So, the customer journey part, let's talk about that a little bit first. Hyper-connected consumers across all different screens nowadays have much different expectations about their engagements with brands. They expect brand messages to be relevant. Their connectivity creates a data exhaust that enables brands to be informed and relevant, but this can be frightening for marketers – all of that information and everything that can be measured is a mammoth challenge. How do you figure out which of those metrics actually matter?
This is what Copilot solves. It allows the machine, with AI, to actually do that hard work that people can't manually do. An example would be something as simple as an auto company that is trying to drive engagement with their content and get people to come back to their site or to a dealer site. They know when people do that, and then take another action like downloading a brochure or building out their personal spec car, or locating a dealer in their area, or requesting a quote, all of those things get people closer to going into a dealership.
Instead of just measuring the click through rate, which believe it or not a lot of marketers still do, you let the technology build multi-metric optimizations, and sequential messaging that says, for example, if someone comes to the website, gets them engaged with more content. It also enables us to find more people that look like the people that have done that in the past.
Marketers now say “I understand this is where the audiences are; I understand this is where the customer journey begins; help me measure and help me optimize for better outcomes.”
Viewability, brand safety, those things are table stakes nowadays. They must be able to prove that that shift into digital is having a positive impact on their business so that's what we're helping them to do.
Rogers: Could put some context to the size and scope of the dollars flowing through the Xaxis platform? If I said billions of dollars of media spend flow through the Xaxis platform a year, would that be completely off base?
Sweeney: Globally, no it would not.
Sweeney: We're in 46 different countries, and I think the US and Canadian markets tend to be a little bit more progressive. Because programmatic really was first here, but there's incredible things happening that we're able to leverage in some of the Nordic states and UK and APAC as well.
Rogers: Since you're talking about integrating with client data, are you beginning to have a window into or a role to play in the digital business transformation process that every company is going through today?
Sweeney: Yes. Our data integration engineers are very often onsite with marketers, meeting with their peers and collaborating around their tagging structure, how they're collecting data, what they have access to, what they don't have access to, and if there's offline data they think is important, what can and should be tested or how to activate that data for measurable outcomes.
Rogers: In the conversations I have with not only CMOs, but CEOs and even Boards, the challenge is of integrating various data sets across a global company are so large that they end up bringing in a strategic advisory firm to help them with the heavy lifting. Is Xaxis helping WPP fend off the strategic advisory firms in that race to be the point of contact between the CMO, CEO, and consumers?
Sweeney: I think the consultancies have done a good job selling the promise of digital transformation to clients at the highest levels, but no one understands audience engagement through media better than we do. The new frontier is applying data to linear media audiences as well as digital audiences and having it all connected in a holistic and efficient way. Given our decades of experience in markets all across the world, no one knows the full set of media partners and their audiences better than we do. We look at what data they currently have and are collecting. We help them leverage that data and the insights you can find across the ad server in the DSP. Our data engineering is very often brought into client meetings to consult, not just to help win the pitch, but more importantly, help develop the plan. And then we execute, which is something the consultancies can’t do.