How Xaxis Marketplace Swims Up The Waterfall

Xaxis MarketplaceLike all programmatic buyers, Xaxis faces a challenge – and that’s securing the best and most inventory for its clients.

In a publisher waterfall, ad servers generally prioritize programmatic below direct-sold campaigns, prompting other buyers and exchanges to start asking publishers to implement a practice known as header bidding.

But Xaxis, WPP’s trading desk (or, as it calls itself, a programmatic media company), is addressing this problem within a publisher’s existing ad server.

Instead of making programmatic connections via private marketplaces or header bidding, “Xaxis is going direct to the publisher,” said Larry Allen, SVP of business development and global platform sales.

Over the past 18 months, Xaxis has built direct connections to 100 publishing groups as part of a shift toward premium content and away from the long tail.

Xaxis Marketplace will create a partnership with a publisher where it guarantees revenue in return for a higher priority level in that publisher’s ad server.

The approach is reminiscent of the ad network deals of old – sometimes replacing deals set up by predecessor 24/7 Real Media ­– but with a few twists, one of which is gaining better access to inventory than most, if not all, of a publisher’s programmatic buyers.

“It was important for us to go further up the stack to ensure we get access to the audiences we want to buy before we have to compete with the 400 DSPs that are plugged into AdX,” Allen said. “We’re treated as a standard, direct-sold campaign, which gives us priority.”

Xaxis isn’t alone in its push for better access. Sonobi, A9, Criteo and OpenX play this game too, among others, according to Matt Prohaska, CEO and principal of Prohaska Consulting.

“There’s a land grab for supply among top programmatic brands and ad networks and individual ad agencies that want to play leapfrog” with open and sometimes private exchanges, Prohaska said. “Smart marketers have realized that getting a full and early view to an audience has real value.”

Xaxis is also using data to improve efficiency. Each day, the trading desk will automatically sync all of the audiences it has in market and roll them out into a single segment. Using Krux, it then makes that segment available to publishers.

“It’s a way to remove any [unneeded] audiences so we’re not wasting any inventory,” Allen said. That also means Xaxis buys almost 100% of inventory publishers make available to its marketplace, a plus for sellers.

For publishers that don’t use Krux, Xaxis looks at factors such as viewability and human traffic to optimize the inventory of an individual publisher.

There’s less waste, too, because the connection is direct, with fewer intermediates to take a cut or lose track of an impression.

“With less intermediaries, it allows us to have a cleaner transaction,” said Sean Holzman, chief digital revenue officer at Bonnier Corporation.

The final twist is transparency about that data.

While Xaxis sometimes takes heat among advertisers for its opaque buying methods, the publishers it works with praise Xaxis for its regular communication about what it’s buying and why.

“There is constant transparency and constant optimizing,” said Spencer Janis, the SVP of strategic sales and partnerships for Zuus, a music video site described as the “Pandora of music videos” by Billboard. “The more transparency you have, the better everyone can do,” Janis said.

Xaxis shares with Zuus which campaigns are going on with which advertisers, as well as the KPIs for the campaigns. It also passes along whether an advertiser is using Nielsen’s OCR or comScore’s vCE measurement methods, for example, or if the brand is using BlueKai data overlays.

Bonnier also receives details from Xaxis about performance that enable the publisher to make adjustments on its end, Holzman explained. Bonnier can use that information for forecasting and to figure out how much it can supply to Xaxis.

Xaxis will tell Zuus if there’s a particular segment or site section that’s doing well, or identify pockets of high or low viewability. That means Zuus can actually take steps to improve performance and strengthen the relationship between Zuus and Xaxis, Janis said.

That transparency around clients and data is very different from ad network deals of old, Prohaska said, noting that “the publisher has more visibility than she previously had when it was, ‘Here’s your monthly check, thank you.’ Now it’s more of an opportunity to bring audience data from both sides into the equation.”

That kind of partnership relationship is much preferred to a common data-based buying alternative – private marketplaces – which often lack communication.

“We have all the information we need to make sure we’re meeting metrics,” Holzman said. “In the case of private marketplaces, we don’t have that feedback if someone’s not sharing it.”

Bonnier works with Xaxis at a variety of price points and priority levels in the ad server. That allows Bonnier to accommodate a larger swath of Xaxis clients – from those that want to pay to be picky to those primarily concerned about price.

But Bonnier doesn’t give this access to just anyone.

“Everyone wants a direct connection,” Holzman said. “Getting their tags into an ad server is the holy grail.”

Bonnier limits the number of partners it traffics directly. When it adds one, it usually removes another.

Xaxis got that direct connection because it “brings us great quality advertisers and a partnership that is very transparent,” Holzman said. “You have to have a bigger relationship in mind.”

Those that don’t operate with that mindset buy through Bonnier’s SSP.

Because Xaxis usually buys a guaranteed amount at a fixed price, and not via an auction, it can pick up high-value impressions for a discount.

But that’s a risk the publishers Xaxis works with are willing to take.

“There are probably some impressions that, if you put it all [in the] programmatic ecosystem, might go for money on a per impression basis,” Holzman acknowledged, “But I think the benefits and yield outweigh the risk and the downside.”

At the moment, there are no plans to expand Xaxis Marketplace’s imprint.

“We decided early on we wanted to work with a fewer number of publishers that represented the greatest scale,” Allen said.

Xaxis views its marketplace as “one giant PMP,” Allen said – or, to put it somewhat unfashionably, as a premium ad network.

Whatever the comparison, it’s allowing Xaxis to fulfill on a famous statement made by sister agency GroupM’s chief digital investment officer, Ari Bluman, who declared in June 2014 that GroupM was planning to move out of open marketplaces.

“We’re in agreement on privatizing the inventory,” Allen said, while emphasizing that Xaxis and GroupM act as two distinct companies within WPP. “We were in the process of moving it all into our PMPs, and we continue on that path.”

At the time of Bluman’s statement, Xaxis CEO Brian Lesser said the trading desk had a 60-40 split between private deals and open exchange inventory. At AdExchanger’s Industry Preview conference in January, Lesser revised the open exchange figure to “less than 10%,” indicating a shift into private deals.

Realistically, though, some clients’ needs continue to necessitate open marketplace buys, Allen said. And walled gardens, like Facebook, YouTube and Amazon, will never run such deals, he added.

Xaxis’ ability to get a higher priority than other programmatic buyers may be circumvented if header bidding partners start letting some of those high-value impressions hit the ad server. But, so far, that hasn’t been a problem.

“Today we haven’t seen a massive amount of inventory fall off to the side because of the technologies being deployed,” Allen said.

But he sympathizes with programmatic buyers trying to flee up the waterfall – as Xaxis has done – as well as with the publishers trying to engineer more favorable setups.

“The integration of the ad server and the auction,” he said, “needs to be much more closely coordinated.”

 

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