GroupM's programmatic trading desk Xaxis is pivoting towards outcomes-based media buying in an effort to wean clients off “crude cost metrics” as clients sharpen their focus on media buying transparency and value.
The business, which is known for selling media to clients at a non-disclosed mark-up on a guaranteed CPM, says it wants to change how programmatic is valued, moving away from standard impressions and clicks based metrics towards metrics those that drive business outcomes.
Examples could include trading on the cost per completed video view to a targeted audience or cost per acquisition or a cost per acquisition.
Ever since Marc Pritchard called out the “murky” digital supply chain – a reference to programmatic trading ecosystem – Xaxis global president Nicolas Bidon says digital is being asked more questions about return on investment.
He tells AdNews the move towards outcomes-based trading is about proving to clients how their media spend is driving value rather than simply cutting costs.
“If you look at the industry overall, it's still using a lot of crude metrics, things like CPMs, CPCs (cost per clicks) - those are metrics that were invented more than 20 years ago,” Bidon says. “We're still measuring the benefits from digital media investments based on comparing these metrics, which frankly are very meaningless in terms of what people really want.
“What we want to do with Xaxis is move beyond just the audience story, which may be right for some, but not for others, and focus on outcome: 'what is it that will move your business as to advertisers?'”
Taking on risk
An example of this outcomes approach can be found in Portugal. Xaxis began discussions with a real estate website to trade media on a cost per lead basis, which typically would be far more expensive than driving impressions.
“In the end, we took a much more risky approach where we said, 'look, at the end of the day, what you want to do is sell houses because they get a commission on every house they sell',” Bidon says.
“We said, 'okay, why don't we agree on a baseline for CPL but more importantly, we'll take the risk but we want a cut of all the houses that you sell from our media activity'.
“So, we lowered the price of the leads and we made up more revenue by sharing the profit we generated for the client. That's pretty novel for a business model and I think we're starting to experiment with these kinds of models.”
Xaxis' move doesn't signal a departure from its current model, Bidon accepts that some clients are happy to receive cheap, guaranteed CPMs, but he believes the market more broadly is moving towards an outcomes-based approach.
100% viewable CPMs
One of the products Xaxis will roll out initially is trading on 'VCPM', which is 100% viewable inventory.
“It's like a guaranteed outcome which is a hundred percent viewability and we're trading on this outcome,” Bidon says.
“So, from an advertiser, you don't take the risk of buying the wastage. It's very transparent and clear what price you're paying and what you're getting for it. So, that's a simple example where it's experimenting again with other providers.”
Bidon admits that “the reality is transparency comes at a price”, but says Xaxis is investing heavily into machine learning and AI technology to help drive more efficient and intelligent media buying.
GroupM chief digital officer John Miskelly tells AdNews the Australian market is ready for a new approach to how media is valued, but one potential barrier is attribution, such as challenges with mobile video.
“I think there should be an attitude shift in how people give credit to media placements from attribution point of view,” Miskelly says. “And from a video perspective, this cost-ridden target of viewable reach is harder because you can't measure some of the stuff on mobile, but I think we're pretty close to getting there.”
'Advertisers determine success'
Another issue is that different media platforms measure video viewability differently, with Facebook saying everything after two seconds should count, others suggesting it should be 50% of a video view and TV saying it should be 100%.
“The agency, frankly, have a really tough job, in terms of determining from that, what's really driving the performance,” Bidon adds.
GroupM's approach is that advertisers should determine what success looks like and Xaxis should trade media on a cost basis that helps them get there.
“However, once they've decided that, they need to be able to measure it,” he adds. “The problem is, today, there are still platforms or tech channels for various reasons - sometimes it's commercial decisions, sometimes it's technical decisions that don't allow that, and I think that needs to stop.”
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.