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Summary:

Display ad tech firm OpenX has raised a $20 million fourth round funding as it seeks to expand its ad exchange marketplace into an “an enter…

Tim Cadogan, OpenX

Display ad tech firm OpenX has raised a $20 million fourth round funding as it seeks to expand its ad exchange marketplace into an “an enterprise platform.” With this round, which was led by SAP Ventures and included participation from new investors AOL (NYSE: AOL) Ventures, Mitsui & Co. Global Investment, and Presidio Ventures, Pasadena-based OpenX now has raised more than $50 million to date.

OpenX has been pretty active in terms of its geographic expansion across Europe and Asia over the past two years, which were helped along by respective partnerships with France Telecom-owned Orange Advertising and Japan’s largest ad agency Dentsu. The introduction of enterprise software provider SAP as the lead investor in the company’s fourth round is meant to reflect a next step in OpenX’s evolution, said OpenX CEO Tim Cadogan in an interview with paidContent.

In general, publishers have to operate various systems for their different ad sales streams, especially for online and offline. With OpenX’s Enterprise, the promise is having it all in place.

“The OpenX Enterprise platform combines an ad server and an ad exchange, allowing publishers to manage exclusive, guaranteed, non-guaranteed and real-time revenue sources all in one unified platform,” Cadogan. “As a result, for the first time publishers can maximize yield across all their ad revenue channels in real-time. We are not limited to just online advertising.”

Publishers are beginning to reluctantly embrace real-time bidding and ad exchanges. On average these days, maybe 20 percent of a major publisher’s inventory is traded on exchanges. The reluctance is due to the not-unreasonable fear that by allowing more of their advertising inventory to be sold via exchanges, they erode the value of their direct sales-i.e., premium inventory.

But as advertisers and agencies continue to funnel more and more ad dollars through exchanges and demand-side platforms, which help marketers set the lowest bids for the ad placements they want, publishers are finding themselves dragged into the exchange arena. As a result, supply-side platforms, like Rubicon Project, PubMatic, Ad Meld, which promise to raise the yields on publishers’ ad inventory in the face of agencies’ assault, are becoming more necessary for content companies. OpenX is also in that area with its own platform and it intends to reach beyond display sales with its latest moves.

“The fundamental premise of why we built what we have built, instead of dealing with an exchange from other parts of your ad business,” Cadogan said. “You can exert more control, integrated reporting. Instead of having to join reports from multiple systems to another, you have one to manage, premium ad spots, sponsorships, house ads. All the data is there and reduces discrepancies.”

In the case of AOL, by making an investment in OpenX’s fourth round, it acknowledges the growing importance of ad exchanges in the display marketplace as both a publisher and ad network operator. Furthermore, it sees the opportunity to capture more offline dollars.

When AOL’s Advertising.com began beta testing its in-house self-serve display sales option aimed at agencies and marketers called AdDesk last year, Jeff Levick, AOL Advertising’s global head, told paidContent that the company used the company heavily and reliably bid on publishers’ inventory for its ad network. But it was more reluctant to place its own content pages’ ad placements up for others to similarly bid on. The new closeness of AOL to OpenX could change that, though Cadogan wouldn’t discuss AOL’s plans. AOL executives were unavailable for comment.

He was open about OpenX’s additional plans beyond building out the enterprise platform. The company will hire more engineers and more sellers as well as marketing staffers. “We are now in a position to do some M&A of companies and teams,” Cadogan said. “The whole enterprise platform is, by its nature, very modular, and works well with third parties. That makes it even easier when it comes to adding new parts to the whole.”

  1. richardsievert Tuesday, May 31, 2011

    when people finally see they are a machine that god made and a more powerful one than even any atomic bomb powerful enough o even create real life than things will get better machines where made with satans angry eyes to destroy you all!
    I am is a jelious god  remember that! your minds are capable of communication from ten son’s apart your eyes can see threw worlds is this not grater than a black berrys to get this power follow me 
    Amen

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  2. More cash can only mean one thing.  Their business is not strong enough to support its self… in other words managements mistook its position and its ability to get to profitability.  Now they continue to throw money at a market that isnt stable nor mature enough to warrant their position.   I give them 1 year before they sell to someone for 1.5x or they disappear all together into the hell of Aol… Aol already has all the pieces that make up OpenX but they’ve ruined them… ADTECH and ADVERTISING.COM

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    1. The exchange market is growing and is still very nascent in many European territories. The US market is some way ahead but still has a way to go to realise it’s potential. Additional funding doesn’t automatically dictate that a start-up is struggling, perhaps they are looking to grow new territories and require additional headcount to do so? (As in fact is the case with OpenX)

      As for Aol having all the pieces to create their own exchange: not true. Any idea how complex and time consuming it is to build a RTB exchange? Most ad servers aren’t focused on maximising revenue, but are focused on ad prioritisation. Exchanges have to calculate eCPMs for numerous publishers almost instantaneously; traditional ad servers aren’t geared up to function this way.

      And for you, Mr Kaplan, Aol Ventures is not Aol per se. 

      Aol Ventures is the venture capital arm of the company and operates independently. They do not make strategic investments but look to support companies in the same technology sphere. If this were seed or 1st round funding, this could be viewed as a somewhat strategic move and you’d be right to be asking questions about Aol/ OpenX plans. But it’s not.

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  3. RTB increases the ad value more than in direct marketing

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