Why Xaxis Needs a Whyaxis

18 March 2014

The problem with Xaxis – the WPP-owned media technology business – is that no-one seems to have worked out that it needs a Whyaxis to make it complete.

To recap, Xaxis has managed to attract opprobrium from all sides (including this one) for being both a buyer and a seller of digital space (the selling bit comes via the merging with fellow GroupM business, the ad network 24/7). So Xaxis buys elements of campaigns for its clients from itself.

Statements from Xaxis that a) it will not allow any advertiser the right to audit the buys made on their behalf, and b) that it considers it irrelevant to tell their advertisers what it paid for the space it is now passing on haven’t exactly inspired confidence in the organisation’s transparency. The previous Cog Blog post on this is here.

For a group of people who regularly advise their clients on the importance of brand trust the media agency business seems in need of some of its own advice. Right now the sector’s reputation is at a pretty low ebb – with accusations of opaque dealing, of keeping rebates generated by aggregating their clients’ budgets, and now of a major player refusing advertisers the right either to audit how their money has been spent or indeed to know what was paid for the space or time in the first place. This failure to be open and transparent affects the vital component of trust between advertisers and their agencies – and when trust starts to evaporate serious problems soon follow.

In February this year, Bill Duggan, Group EVP at the American advertiser association, the ANA wrote: “Our business has historically been built on trust and relationships. But this transparency crisis is causing trust to break down and ultimately that will affect the relationships marketers have with their agencies and the media”. 

In 2012 a World Federation of Advertisers survey of its members found that 88% of respondents agreed with the following statement: “Agency fees are falling, yet profits continue to rise. This demonstrates that advertisers feel that agencies and media owners are being less transparent than ever.”

It could all be so different. Operations like Xaxis are no doubt capable of bringing major benefits for which they can quite legitimately and openly charge. Furthermore I believe that advertisers, if approached in the right way and at the right level will pay for services that demonstrably add value.

Amongst these services are data analytic skills and the ability to turn the crude oil that is raw data into the valuable fuel that drives insights and leads to competitive advantage. Data skills sit neatly alongside research skills as a crucial input to communications planning.

So why subsume these skills within a set of operating principles that are guaranteed to fan the flames that flicker around the sense within many advertisers that the media agencies are basically a bunch of wheeler dealers determined to cheat them at every turn through one means or another?

Prioritising making money from dealing as opposed to charging clients openly and fairly for the time and the skills deployed on planning and evaluating the results of campaigns is a mistake that many of those who lead the media agencies have made over and over again. And here they are making it again.

There are quite legitimate reasons why a volume player like GroupM can offer benefits to its clients (after all it has plenty of no doubt happy customers). But broking space and time from a media owner owned by itself is unwise and could turn out to be the rotten apple that can with time ruin the crop.

When Sir Martin Sorrell announced the purchase of the ad network 24/7 by WPP in 2007 AdAge reported that analysts “said they were not worried about a conflict of interest in a holding company owning an ad network”. To be generous, maybe 6 or 7 years ago these analysts hadn’t thought through how this might develop. Given the scale of those large advertisers recently expressing concern publicly over Xaxis’ stated operating principles (some of whom have voted with their feet and gone elsewhere, even if still within the GroupM portfolio, at least for now) they may want to rethink that remark.

It would be smart if those who run Xaxis quietly started a re-think on just what it’s for. They need to appreciate that advertisers are increasingly and understandably demanding transparency and full disclosure (and yes I do appreciate the difference). Consequently there’s a need to reorganise and reposition the organisation around the good bits. It’s time to deliver a Whyaxix.