Brian Lesser, Global CEO, Xaxis, talks about Xaxis’ vision of the future of digital advertising, the rapid growth of programmatic buying in India and how it applies to native advertising. Lesser also comments on India as a key market in APAC for Xaxis and how video will power the business in India.
Xaxis, part of GroupM and WPP, is a digital media company servicing over 2,700 clients in 33 markets across North America, Europe, Asia Pacific and Latin America.
What about programmatic buying? It is quite the buzzword these days; though still to see traction in India.
I think, ultimately, all advertising will be digital and all digital advertising will be traded programmatically. It’s just a matter of how quickly individual markets will develop. India is very sophisticated, there is a tremendous amount of technology that is developed in the country and what we have seen in other markets is that when you have the right technology-rich environment, media companies or publishers will accelerate adoption. We have few publishers adopting programmatic trading in India but this will pick up over time and when that happens, it will also open up new inventories like us so we can collect data more effectively and serve ads more effectively. So programmatic may be relatively small in India right now but it could be one of those markets which does not go through an adolescence period but directly into the maturity phase.
But with people spending more and more time on digital properties like Facebook, Twitter, Pinterest, etc. which do not have your traditional ad unit ‘boxes’, where does programmatic fit into this world, where native advertising seems to be the more efficient option?
You can buy native advertising programmatically in many markets today. The great thing about programmatic is that it is just a mechanism to buy ad inventory and so it can be applied to any type of inventory, whether it is display, video or even social. The key to programmatic is to understand your audience and apply those understanding to different types and formats. So there is no reason that programmatic will not apply to native advertising. In fact, native advertising is perfect for programmatic in some ways because you can not only customize your audience but also the creative.
Can you tell me something about your expansion plans this year and where does India lie in these plans?
Right now Xaxis is present in 34 countries. WPP is in 110 markets. So we have a lot of headroom to expand geographically. We just started a business in Russia, Brazil and Middle-east. By the end of this year we will be in around 40 markets.
We see India as a key market for growing our business in Asia-Pacific as well as globally. The other area we will expand, besides geographically, is through new products. We are constantly launching new products across various channels and you will see how quickly we roll these products out.
Can you give some examples of these new products?
One is Xaxis Sync, which was actually developed in the Netherlands and is now live in four markets. Sync allows us to match a mobile ad to what is happening on TV. This is in our mobile suite of products but it interacts really well with television and we offer it to many of our television advertisers. So, you will see more of this kind of innovation from Xaxis.
When can we see Sync in India?
It is still in development for other markets, maybe in 2015.
It is interesting that you mentioned this product. With we living in an increasingly multi-screen world, will advertisers need to start thinking about linking different mediums simultaneously?
Yes, what we are going to arrive at is a world where advertisers no longer segregate budgets according to channels. Within the next 5 years we will have sophisticated advertisers who will want a channel-agnostic media plan which will be much more focused on the actual format, the creatives and how are they gleaning insights from the inventory rather than trying to divide mobile, social, etc. This is the promise of programmatic.
How does Xaxis see itself----are you a technology development company or are you a digital advertising agency?
We consider ourselves as a programmatic media and technology platform. The reason we say that is, depending on the market we bring different markets to our advertisers. For example, in Europe, we are very oriented towards video. In markets like Germany and UK, over 50% of our business is online video, whereas, in markets like North America we are less penetrated in terms of video but we have some innovative products in digital OOH, mobile and, even, radio.
How are things looking for Xaxis in India?
We have had presence in India for more than two years. Our business here started out primarily as display business where we were using data to target banner advertising. But what we have seen in the last 6-12 months is that video business is growing and becoming very important in India. We recently launched our Data Management Platform (DMP)—Turbine, and that is going to power all of our display business and television business. I see, in the next two to three years, video is going to power the business here in India. But, we are also looking at other channels as we think of programmatic as channel agnostic. We want to find the audience where they are, whether it is on the mobile phone or on the PC or through social media, etc. So I think over the course of the next couple of years, Xaxis will also have offerings in digital OOH and even television.
We still have issues with digital OOH in India though. How do you plan to overcome those?
We have businesses currently globally where we do Digital OOH, so what it needs is some network that allows us to serve ads programmatically at bus kiosks, shopping malls, health clubs, taxi cubs, etc. So we do need that infrastructure in place to start digital OOH business. The other thing is that through mobile devices there are more media owners are enabling ‘beacons’ that allow us to target advertising where the phone owner is through a billboard or a kiosk. So, we do need the structure in India but it is moving in the right direction.
Will you be partnering with any OOH agencies here?
Yes, absolutely. We have some of the components within Group M; within WPP definitely. Whenever we are developing products around digital OOH we partner with other agencies within WPP.
Now that you have come out with Turbine, what advantage do you think it gives you in a high-potential market like India?
So, part of the problem with data is that it is so abundant that it becomes more and more difficult to store it appropriately and it is even more difficult to extract it in a way that is meaningful and apply it against inventory. In the past when software companies produced DMPs, you could think of it as a box and the more data that was produced, the bigger the box needed to be. That is a very old way of thinking about DMP architecture.
The way we think of DMP is not as a box but as ‘listeners’ we put into the data stream which enables us to understand what data is important and action that very quickly. For a market in India, where there is such high mobile penetration, we can not only be more effective in capturing data in order to build models but also in taking action against inventory in real-time.
Why did you feel the need to build your own Digital Management Platform (DMP)?
There are two reasons. In Xaxis we always believe that we need to build software that gives us proprietary advantage though we also partner with a lot of the best companies in the industry. We feel that data management is the most important part of the advertising technology stack. We think our future will be built around data and all the products we bring to market will draw from data. The second reason is when we looked at the market and evaluated other solutions in the market we did not find any solutions that would suit our purposes.
When you spoke about becoming platform-agnostic as well as video being a key medium in coming years, I suppose you are talking about reducing the divide between digital and TV. One of the problems here could be the lack of common metrics for both, especially in a country like India where we have already seen some issues around TV metrics. How big is this a challenge and how do you plan to overcome it?
I think you have hit the biggest nail, viz. metrics. Generally speaking, advertisers know how TV advertising performs. People like to say that TV advertising is not measurable but this is not true. Good advertisers know precisely the effects of advertising on television. In digital, I think, for traditional advertisers it is not as clear how much they spend on video or display or mobile and how that impacts their sales. So, when we talk about increasing our video business over time, we need to do is take the metrics that advertisers understand on television and transition them to digital.
The simplest way of thinking about that is that if an advertiser understands that broadcast gives you a certain amount of reach and frequency then online videos can be an extension of that—to reach users that they cannot reach via broadcast. On the other hand, they might be doing a very good job of reaching their audience through broadcasting but may want to increase their frequency. We are building systems that make it easy for advertisers to understand this trade-off between reach and frequency and the efficiency with which they can deliver that across channels.
So, you are saying it need not necessarily be an either/or situation for advertisers?
No, it should never be that. A lot of people talk about a transition from broadcast to digital but we think of it as more of an extension. We encourage advertisers to spend on TV, it’s just that some of what they do can be extended to online videos in very efficient ways. They both have to work together.