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Open Source Cloud Authors: Elizabeth White, Zakia Bouachraoui, Liz McMillan, Pat Romanski, Yeshim Deniz

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OpenX Market Opens For Business As An Alternative Online Advertising Marketplace

OpenX, the largest neutral online ad server for website publishers, is finally ready to take the wraps off of OpenX Market, a service that has been in the pipeline for quite some time and was anticipated to make some waves in the digital advertising industry. I have my doubts about its disruptiveness, but website owners and publishers already using OpenX (we use it at TechCrunch) or planning to switch soon are sure going to want to take a closer look at the service, which is being launched in beta today.

In essence, OpenX Market is an independent marketplace where publishers can connect to advertisers directly to sell their ad inventory, while advertisers (either directly or via agencies) can access targeted inventory. Publishers define a minimum “floor” price for their ad impressions. OpenX Market then runs a real-time auction for each impression, with advertisers doing the bidding. If the winning bid from the auction is higher than the publisher-set minimum price, the higher paying ad is served and the publisher makes more money. If the winning bid is less, the publisher’s original ad runs.

It seems like a win-win for the publisher, since you have the ability to shoot for a higher paying ad without risking a total loss of money. If the higher bid doesn’t attract any advertisers, you are still able to fall back to your existing ad. The incentive for advertisers is that they have access to OpenX’s large pool of publisher inventory and ad space. OpenX’s has a publisher base of more than 150,000 websites that flows more than 300 billion impressions through the company’s software. OpenX publishers as well as non-OpenX publishers are invited to participate in the market. Advertisers can also set targeting parameters to find the best space that suits their needs, including user frequency, contextual categories, and technical/browser settings.

The company also rolled out a new version of its OpenX Ad Server 2.8 that integrates with OpenX Market. This lets publishers easily participate in the Market via an OpenX Market plugin, which allows publishers’ ad space inventory to flow directly into OpenX Market for advertisers to bid on.

An eBay-like marketplace for ads is not a revolutionary concept. Right Media and DoubleClick both have exchange marketplaces for advertisers and publishers, but neither are independent platforms like the OpenX Market, where any publisher, even those with other ad servers, can be a part of the bidding process.

OpenX (which used to be called Openads), has been growing rapidly under the leadership of former AOL CEO Jonathan Miller, who is the company’s chairman, and ex-Yahoo executive Tim Cadogan who is CEO. An open-source venture, OpenX has raised around $20.5 million in funding from Accel Partners, Index Ventures, First Round Capital, Mangrove Capital Partners and O’Reilly AlphaTech Ventures.

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