Four months after WPP launched audience buying company Xaxis, CEO Brian Lesser discusses the firm’s position in a crowded marketplace and what Xaxis has planned over the next year.
Direct Marketing News (DMN): It’s been four months since Xaxis launched. How did those first four months go, and where does the company stand today?
Brian Lesser: It’s been an incredible four months. In June, we launched a company in 13 markets with 110 people on a run rate for half a billion dollars in media spend. That was no small undertaking. But the company right now is very successful in terms of simplifying what we do within the audience buying space and making the product more about insight [and] analysis into audience than the technologies that go into providing those benefits.
DMN: We’re seeing a lot of companies enter the audience buying space or reinvest in their presence. Are we seeing an oversaturation? Or does that trend speak to how new the space is?
Lesser: I think you’re seeing a lot of companies enter the space because audience buying is difficult. It requires a serious investment in technology, and there’s a lot of interest from the venture capital community to invest in this space. But I do think we are getting to a point where it is oversaturated and there are too many point solutions. It’s making it more complicated for advertisers that want to invest in the space. So what you will see over the next six to 12 months is consolidation in the space. And I think we’re already seeing that with several acquisitions that have occurred over the last few weeks. But certainly you’re going to see some of these point solutions partner up and try to develop an all-encompassing audience buying platform, and there will be other large acquirers in the market that need that type of technology to build out their audience buying practice.
DMN: The predominant channel for audience buying is display. But what are the big channels that are next?
Lesser: Video is the fastest growing part of our business right now. What we’re seeing is that while display tends to attract direct response advertisers, video has been more successful in attracting brand advertisers that realize they can reach the same audience through addressable media, principally online, than they can through broadcast media like TV. So video is going to continue to grow aggressively for us and the industry. I also think [with] mobile, with the development of tablets and the new formats that have come with tablets, we’ll finally see the type of investment that it deserves as an addressable medium. And TV is not too far down the road. We’re already starting to run pilots through addressable TV. Our objective is to allow advertisers to reach an audience across all addressable media. Right now, that’s principally through display, video and mobile, but it will not be long before TV gets added to the mix.
DMN: Looking out six to 12 months from now, what is going to be your primary focus? What do you expect to be hearing from advertisers?
Lesser: There are really three objectives for Xaxis. One is geographic expansion. We’re in 13 markets right now. In the first half of 2012, we’ll be opening up two offices in Asia and an office in Latin America. Because we’re part of WPP, we work for large global advertisers, and those advertisers want the efficiency of one solution globally. The second is new product development. As I mentioned, although display and video is a very nice business for us, we’re working on products that allow advertisers to reach audiences through other addressable media. And the third is the continued development of our insights products. So Xaxis is as much about reaching audiences at scale at an efficient price as it is about providing analytics and insights back to the agencies so that they can plan more effectively across all channels, even those channels that are not addressable.
