DPS Lunch Workshop with OpenX: The Sell-Side Promise

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As programmatic advertising grows and becomes a more dominant part of digital advertising – estimated to account for almost a quarter of digital ad spend by the end of this year – where does programmatic selling fit in? The traditional SSP model is changing, and what is emerging is a more comprehensive way of selling programmatically. Are publishers ready to take advantage?

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  • In 2008, RTB was born. Openx entered the space around this time partnering with the earlier inventors at fox interactive media. The cornerstone of openx’s business was centered on programmatic and rtb. The ssp’s focused on the network stack as their traditional business centered around waterfall and daisy chain management/optimization. It wasn’t until 2011 that the ssp’s fully began to embrace programmatic.In 2013, RTB and programmatic makes up around 20-25% of inventory buys. In 2017, we expect programmatic to be greater than 50%, which means we’ll see tremendous growth year over year. Driving this are the need for operational efficiencies, control and yield. A telling metric is that 15% of our publisher’s revenue on the openx platform comes from bids that are $10 or higher. Additionally we’re seeing programmatic guarantee and private exchanges, which are evolving, but demonstrate significant investment in all areas of the demand stack becoming increasingly programmatic. The goal being that all demand sources compete for each and every impression. Increased liquidity results in increased yield.
  • Who’s sold a house? What if your agent came to you with 3 offers and showed them to you one at a time vs all 3 at once? He/She allowed you to select the first, but if you didn’t accept it you void it. You would never want to work in this environment. It’s not fair and eliminates choice.Main takeaways-Wouldn’t accept this in selling a house, not acceptable when selling ad inventoryWe believe it’s about bringing in choice and competition to the marketplace to drive better results.
  • Let’s look at the current situation we’re in today and talk about why it’s not acceptable. We’ll see how this housing metaphor applies to choice. Here’s the traditional SSP model. You have your top layer of guarantee, middle layer of exchange which leads to a waterfall of networks. The inherent problem is that the exchange layer and network layer work independently and don’t compete with one another for impressions. The privatization of networks is based on a potential CPM. If most network demand defaults to a 100% fill campaign that fills at very low CPMs then the deck is stacked against you. To borrow from the real estate metaphor, you are only seeing one offer. You don’t have a chance to call other buyers that would have paid a higher premium.The other opportunities are mirages. Your chances of driving a higher CPM never existed. If the exchange could have competed against the networks you would have achieved dynamic allocation. The last note from an efficiency perspective is that daisy chaining through networks has a 10% discrepancy (per hop) resulting in lost impressions.We deserve better. We should expect more.
  • We were the first to integrate an exchange into an ad server. What we learned was this drove efficiency and yield. Separation of this 2 critical monetization technologies caused fragmentation and lost opportunity. We didn’t immediately participate in the SSP space because we knew it could be done better. We knew that combining demand source (agencies, rtb buyers, networks) in one overarching auction (within the ad server) would increase competition, liquidity, price support, resulting in higher yield and operational efficiency. Let me illustrate this approach to you now and you’ll see the difference from the previous waterfall diagram.
  • We’ve moved from the traditional waterfall approach to a horizontal auction that puts all demand sources on the same playing field. For the first time a single auction uniting all demand takes place to compete for every impression. Instantly gain the 100% fill you desire with >75% increase in CPMs.Remembering the previous slide of the traditional SSP, we now see CPMs rise with every demand source as they compete against each other.
  • By fusing the demand sources in a smarter auction mechanic, known as dynamic allocation, paired with less discrepancies by mitigating pass backs through advanced fill prediction, we can generate north of 75% higher yield than the traditional SSP model.
  • The proof is in the pudding with our recent client additions that used to leverage traditional ssp platforms. Take United Online as an example. We drastically outperformed their previous partner by 150% within the first quarter on OpenX. Proof that our first generation of ssp technology outperformed everyone else. It validates the performance we expect from our next version.
  • HistoryOpenX was founded in 2007, offering an open source ad-serving solution. In 2008 we hired a new CEO and began to raise money so that we could offer an SaaS ad serving solution with a focus on working with premium publishers.Currently we have 300 employees in offices across the globe, including Los Angeles, New York, Tokyo and London, and we plan to open an office in Germany the second half of this year.We’re a large company. We’ve achieved profitability, and we’re at a run rate of close to $200 million or more for 2013. We have data centers across the continent with over 5,000 servers, which means you won’t need to be concerned about performance or latency with OpenX. Much of our high-performance is a result of our $75 million in funding.  Experienced TeamOur leadership teams comes from the Search sector, from such companies as Overture and Yahoo!, which means they’re experts in building marketplaces as well as advertising technology. Leading InvestorsOur investors are a combination of leading capital venture firms such as ACCEL and Index Ventures. We also have major partners, such as SAP, Samsung, Dentsu who have invested in OpenX. We’ll talk more about these partners later in the presentation. AccoladesThrough the years we’ve been recognized with prestigious awards, of which we’re quite proud.Accolades have focused on OpenX’s ability to make money for publishers and outperform the competition, as well as deliver custom-built tools that publishers need. Our achievement has resulted in Forbes naming us the 7th Most Promising Company in America, as well as receiving a CODiE award in 2013 for our technology.  This is the high-level overview of OpenX DNA. Now let’s talk about our Ad Exchange and how those pieces fit together.
  • DPS Lunch Workshop with OpenX: The Sell-Side Promise

    1. 1. The Sell-Side Promise JASON WHITE GM, PUBLISHER BUSINESS
    2. 2. Story of Programmatic Importance Guaranteed Guaranteed Guaranteed RTB Programmatic Premium Programmatic Guarantee Private Exchange RTB Network RTB Network Network
    3. 3. Choice Puts You in Control X $350,000 X $250,000 X $125,000
    4. 4. Choice Puts You in Control $350,000 $650,000 $275,000 $400,000 $175,000
    5. 5. SSP Technology Sequential Selling $8.00 CPM 20-30% Sponsor AUCTION SSP Net 1 $2.00 CPM 20% Exchange SSP SSP SSP $1.00 CPM Net 2 25% $0.75 CPM Net 3 Net 4 • No dynamic allocation • Pass back from Net to Net loss of 10% per tier -10% 50% $0.50 CPM $0.20 CPM -10% 75% -10% 100%
    6. 6. The Future of Monetization is Here Network demand and RTB demand are fused to create one unified and complete global auction where all buyers compete on every impression
    7. 7. Fused Auction $8.00 CPM 20-30% Sponsor RTB Exchange Net 1 Net 2 Net 3 Net 4 $2.25 CPM $1.50 CPM $1.00 CPM $0.75 CPM $0.25 CPM 100%
    8. 8. Fused Auction $8.00 CPM 20-30% Sponsor RTB Exchange Net 1 Net 2 Net 3 Net 4 $2.25 CPM $1.50 CPM $1.00 CPM $0.75 CPM $0.25 CPM 100%
    9. 9. Customers Agree 250% Yield increased 150% 200% 150% 100% Baseline 50% “After conducting a rigorous evaluation of the various options available in the market, we are convinced that OpenX is the right option for us.” United Online Case Study 0% 4/1/13 4/30/13 5/29/13 6/27/13 SANTO CRISCUOLO SVP Media Group CPM performance Q2 2013
    10. 10. Thank You History Experienced Team Founded in 2007 • 300+ employees Global Offices • LA (HQ), NY, London, Tokyo & Munich $150M+ • Revenue in 2012 Leading Investors #7 Forbes Rank • Most Promising Companies Well-capitalized • $75M+ to date Infrastructure • 5 data centers • 3 continents • 5,000+ servers Accolades

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