OpenX Aims to Hold Off Google, Takes $10.4M Third Round


logo_openxOnline advertising server software maker OpenX Technologies today announced a $10.4 million third round of venture funding, bringing total investment in the company to nearly $31 million since mid-2007. The new money, which CEO Tim Cadogan says will carry OpenX to profitability, gives the Pasadena, Calif.-based startup a war chest with which it hopes to fend off competition from Google (s GOOG), which introduced a competing free ad server product last year. DAG Ventures of Palo Alto, Calif., led the round.

Since its last funding, OpenX (formerly known as Openads) has diversified its product line in an effort to stave off a challenge from Google’s Ad Manager. Like OpenX’s original downloadable, open-source ad server, Google’s hosted software is used by web publishers to manage and track ad campaigns on their sites. OpenX introduced its own hosted product last fall, offered in both free and premium versions. More recently, OpenX launched a marketplace through which ad buyers and sellers can connect.

With a monthly run rate of 10 300 billion impressions, OpenX’s downloadable ad server is vastly outpacing the hosted version, whose run rate stands at about 7.5 billion. Cadogan says the cloud product could soon overtake the installed version, however. That could potentially lead to increased revenue from the hosted product’s premium edition, which is serving more than 100 million ads monthly. Cadogan wouldn’t directly discuss OpenX’s revenue, except to say that the company’s first sales didn’t occur until the fall of 2008.

OpenX added a new revenue stream this spring with the launch of its ad marketplace. Cadogan characterized it as a middle-market product, simpler than Google’s DoubleClick Advertising Exchange and Yahoo (s YHOO) ‘s RightMedia Exchange. Launched in April, the marketplace’s run rate is already up to 2 billion monthly impressions, according to the company. OpenX also takes in revenue from professional services and customer support.

The threat of Google’s entry into the sector has prompted OpenX to tout its independence, neutrality and openness as distinguishing features, although Cadogan stressed that its ad server product is also more customizable than Google’s. “We couldn’t outspend them, so we’re trying to create a different value proposition,” he said.

Cadogan said OpenX is now majority-owned by VCs including DAG Ventures, Accel Partners, Index Ventures, Mangrove Capital, First Round Capital, and company Chairman Jonathan Miller. The new round builds on $15.5 million Series B funding in December 2007 and a $5 million first round in May 2007. Cadogan also noted that the company still had a “good chunk” of its Series B in the bank when it completed the new round, and said that if all goes well, OpenX could reach profitability sometime next year.

Comments are closed.