OpenX Takes On Google, Others In Online Display Ads
The technology of online display advertising is evolving rapidly, says Tim Cadogan, chief executive of OpenX.
His startup recently received $20 million in funding led by the venture capital units of SAP (SAP) and AOL (AOL), along with two big Japanese groups, Mitsui Global Investment and Sumitomo’s Presidio Ventures. It’s now received $50 million in total funding.
OpenX provides OpenX Market, an online ad exchange that enables live-auction bidding for Internet ad placement. The company also provides OpenX Enterprise, an ad-serving technology that integrates with an ad exchange for a unique digital ad serving and revenue sharing platform. The business could disrupt older business models and search ad leaders like Google‘s (GOOG) DoubleClick service. This category of technology has been in the news of late with Google’s $400 million acquisition of AdMeld.
Cadogan recently spoke with IBD about its business opportunity in the online advertising market.
IBD: Tell me about the market opportunity you are targeting.
Cadogan: Internet advertising has two major sectors, search advertising and display. Search for so many years has been the biggest and was the fastest growing, but it’s now beginning to slow down simply because the volume of searches is decelerating. It has sort of reached a natural level of search volume.
Search marketing is now mature enough that it is not growing at the rate it was. The quantity of ads is not growing as fast and the price isn’t growing that fast either. The Interactive Advertising Bureau said U.S. ad revenue from searches grew about 12% in 2010 to $12 billion.
Online display advertising, though, is nearly $10 billion and is growing twice as fast as search. According to the IAB, it grew 24% last year. And at the same time, the display world, which traditionally was pretty much manual, is now becoming more scientific.
IBD: What do you mean by saying that display advertising was manual?
Cadogan: Traditionally, display was sold through a sales force. People come to you and ask if you would like to buy the big ad at the top of the Yahoo home page and that will be $700,000 for the day. A lot of big deals get negotiated upfront around big packages.
Now what is happening is that you have the rise of ad exchanges, such as ours. An ad exchange is basically like a stock market, except that you are not trading stocks but you are trading ad inventory. We take all the components of an ad server traditionally used for online advertising to help with direct sales and we add in an ad exchange — the stock market for ad inventory — and put them together into a single platform. We can offer the publisher an integrated system where they can manage and maximize their revenue in one place.
Posted 06/27/2011 05:23 PM ET
-Source : investors.com