OpenX Blog

OpenX Labs: Sustaining Innovation

By: Caleb Sotelo, Director of OpenX Labs

Science-assisted Innovation

In a few short years the Lean Startup movement has transformed the way companies of all shapes and sizes grow. Lean practice encourages the application of science in business innovation — by making measurable hypotheses about products and users, and proceeding to validate these with experiments, we can eliminate waste and bring truly valuable products to market much faster.

For startups building in uncharted territory, this approach can appear so obvious it almost doesn’t deserve the name “Lean”. But for larger companies with well-established products in known markets, Lean practice can seem foreign and incompatible with their business because an approach that constantly factors in uncertainty and experimentation tends to buck traditional management techniques. Is there are a place for innovating scientifically in well-established companies?

Innovation in Large Companies

“We can’t solve problems by using the same kind of thinking we used when we created them.”
—Albert Einstein

Innovation is exciting because it opens doors to new solutions, products, and lines of business. But, as Einstein points out, innovation is more than an exciting alternative, it is necessary for progress. Our thinking itself must evolve to keep up with the latest challenges and opportunities. For this reason, Lean practice isn’t only for traditional garage and ramen noodle startups; established companies need innovation engines—internal startups—that systematically discover sources of long-term growth.

This is especially true in display advertising technology. Have you seen the LUMAScape? We work in one of the most complicated, fast-moving, and profitable industries in the world. Ad tech is brimming with new evolutions, from new technologies like Real Time-Bidding to new display mediums like wearables and virtual reality. New ideas must be captured and tested continuously in order to ensure survival, let alone success or market leadership.

Introducing OpenX Labs

We at OpenX recognize the need for continuous, disciplined innovation, and as a result, we’re proud to announce OpenX Labs, an internal organization whose purpose is to sustain innovation for OpenX and our customers’ long-term success. Our vision is to serve our customers by incubating new ideas, testing ideas that are valuable, all while learning intensely throughout the process. Let’s unpack this:

1. Incubating New Ideas
Incubating innovations is Labs’ specialty. In a spirit of entrepreneurship, the goal is to take ideas that have the potential to benefit OpenX’s customers, and develop them iteratively through the application of Lean techniques. Ultimately, collecting and moving forward with ideas that show a strong promise for success.

2. Surfacing Valuable Ideas
After incubation, projects that demonstrate significant value will be suggested for graduation to core teams for continued development.

3. Learning Intensely
Demonstrations that do not prove immediate and significant value for OpenX are tabled. However, the methodology Labs will employ for incubating ideas guarantees that “failure” is always accompanied by empirical data and insights. The approach ensures that every Labs initiative, when executed correctly, will generate valuable business data that will be meticulously recorded. The quality of learning that happens should be the true measure of our success.

Labs is a Service

Most importantly, Labs is not a secretive Research and Development department, but an open group with fluid membership, where practices and progress are shared freely. To this end we’ve introduced an internal system that allows any employee across the company to submit and discuss ideas for potential Labs incubation. The Labs team will be comprised of OpenX employees who are willing to contribute on a per-project basis. Aligned with the values of the larger organization, service is our guiding principle.

OpenX Labs is a way to harness the creativity of our employees, and establish an engine for identifying the ideas that will add long-term value for the customers we serve. We look forward to sharing the products, features, and insights that come out of Labs in the coming months.



From Programmatic Scale to Sophistication

Study shows 64% lift in demand and 26% lift in supply worldwide for programmatically traded inventory

The 2014 Global Programmatic Insights Report is the first study of both buying and selling behaviors in the OpenX marketplace, covering programmatic trading across screen types and buying models.

Our unique visibility into programmatic trends provides us with a more comprehensive picture of the health and direction of the market. Key findings from 2014 include:

  • Programmatic enjoyed strong growth in 2014, with demand up 64%, and the volume of supply up 26%.
  • Growth in demand was led by five industry sectors, and accounted for nearly 40% of total ad spend. Those sectors are: CPG, insurance, telecom, retail and health & beauty.
  • Both supply and demand are growing globally. Nearly half (48%) of all ad requests stemmed from outside the US. In Europe, programmatic spending increased by 80%, and in Canada by more than 100%.

The growth in sophistication is particularly notable. In 2014, programmatic campaigns routinely included more screens, formats and buying models.

For example, mobile programmatic continued its upward trajectory.

  • In 2014, demand for mobile inventory grew at 4x the rate of demand for desktop ad units.
  • Based on 2014 growth rates, mobile will likely account for 50% of all programmatic ad spend in 2015, eclipsing spending for desktop.
  • Mobile now accounts for 25% of ad requests in the OpenX Ad Exchange, nearly tripling in volume since 2013.

The expansion and adoption, of newer models for transacting programmatic campaigns, also point to increasing sophistication among buyers and sellers.

  • According to eMarketer, PMP spending will more than double in 2015, generating $2.53 billion in revenue, bringing new ad dollars to programmatic.
  • CPMs earned in PMPs are 3x higher than those earned in the open ad exchange — a positive trend for publishers seeking to optimize their programmatic yields.
  • Although open marketplaces will get the lion’s share of spending, programmatic direct is expected to gain quickly, growing from 8% in 2014, to 26% in 2015 and 42% in 2016, eMarketer reports.

The global programmatic industry saw substantial growth in 2014, driven in large part to the increasing sophistication among buyers and sellers. We continue to see important trends emerging such as the substantial growth of mobile channels and configurable buying/selling models making programmatic an increasingly desirable transaction method for digital advertisers who are now more than ever interested in collecting and executing deals backed by audience data.

Click here to download the full report.

ox-programmaticinsights-infographic — v2.1

Ask an Expert: Pixalate CEO “Trust is a Critical Component of Success” in Advertising

By: John Murphy, VP of Marketplace Quality

The serious issue of fraud in the online advertising industry is – or should be – top of mind for us all. The good news is that key industry players are taking action to expose fraudulent traffic and set definitive standards to create and maintain safe and trusted advertising marketplaces. One such company, Pixalate, has debuted its own set of standards via its Global Seller Trust Index, to provide much needed transparency into RTB marketplaces.

This week, we had a chance to chat with Jalal Nasir, Pixalate CEO and Co-Founder, to get his thoughts on why quality standards are an increasingly critical ingredient to eliminating fraud. Jalal also offered his insights on the future of the industry as a whole.

OpenX: Why does the industry need quality standards, such as the Pixalate’s Global Seller Trust Index?

Jalal Nasir: We saw that open markets succeed best when there are independent ratings that can serve as a trusted benchmark. Trust is a critical component of success for any open market. Pixalate is in a unique position, because of our access to the global RTB data stream, to offer actionable insights into the challenges faced by RTB with a neutral assessment. An independent quality rating standard represents a powerful opportunity for the programmatic industry to measure itself; a quality benchmark standard driven by data also challenges us to think deeply about how we’ve been measuring success.

It’s not that RTB marketplaces have struggled to find trust; it’s that the traditional metrics used in advertising have actually always had that struggle. An independent rating standard that assesses quality, not reach, for instance, provides the holistic framework we need to drive successful adoption of programmatic.

What was the most surprising finding as you conducted the research for the Index?

We focus on overall trends in the data rather than particular events or performers. The most powerful trend we’ve seen, month after month, is that reach does not correlate to quality—it’s not even a question. Raw numbers simply do not equal results. That upends everything we’ve assumed in online advertising and web analytics since the first dot com era, but it’s undeniable. Reach is a legacy metric, and the reality is that in the programmatic era, reliance on reach harms brands.

Do you see a need to offer measurement in other areas?

We are actively working with partners across formats, channels and verticals to develop the Index to best serve the market. Pixalate is committed to providing a comprehensive rating standard for the industry that helps point the way toward meaningful solutions.

How would you summarize 2014 in terms of TQ?

What has been really encouraging to witness is an early shift by more progressive players away from a point solution approach to a holistic quality approach. Discrete challenges like fraud, or viewability, or publisher masking, really aren’t discrete at all. You can’t have quality inventory if you’re addressing things symptomatically. The phenomenal level of interest in the Global Seller Trust Index launch in December, from analyst reviews to media coverage to industry engagement, is a testament to the desire by the industry to address these challenges in a serious way. We have a long way to go, but we’re on a positive trajectory.

What are your predictions for the industry in 2015? For TQ in 2015?

I think we will continue to see plenty of mergers and acquisitions. We’ll see a lot more investment in, and focus on, mobile and video, particularly app fraud. As an industry, not only will the conversation continue to shift towards an emphasis on quality—more importantly, we’ll see solutions start to surface.

Specifically, I think the industry will get sharper. Buyers and publishers will become savvier. Buyers, for example, are going to want to know how programmatic players are working at the user level, for instance. In changing what we measure, we must also change how we measure. Discussions can be very helpful within the industry, but to cement market credibility, we’re going to need real solutions, real standards. Data will be the most important element in programmatic success in 2015 and beyond.

When It Comes to Fraud Detection, Not All Platforms Are Created Equal

By: John Murphy, VP of Marketplace Quality

Traffic quality serves as an umbrella term for a host of related topics: fraud, bots, URL masking and viewability. Catching crooks and cleaning up the ecosystem is a focal point for buyers and sellers in 2015 – and while it won’t be easy, the war to keep inventory clean can be won.

One scary stat to place this in perspective: a recent study found bots generated 11% of display ad impressions and 23% of video ads. All together, advertisers could lose more than $6 billion globally to ad fraud in 2015.

That’s a number that has the industry taking action: Multiple IAB task forces; the ANA and 4A’s collaborative coalition; the ANA and White Ops “Marketer’s Coalition”; comScore’s Industry Trust Initiative; and major ad tech player’s individual initiatives are working to put an end to fraud in the industry.

In 2014 there was an increased focus on traffic quality across the industry. Google purchased largely to get access to anti-fraud tech, and AppNexus announced it would invest in a certification program to counter buyer feedback about quality. Industry organizations continued to form while third-party specialists like Integral Ad Science and Pixalate emerged to tackle quality measurement. 

Pixalate recently unveiled the Global Seller Trust Index ranking the industry’s top players. For the second consecutive month, OpenX ranked number one in the critically important category of inventory quality. This recognition isn’t something that happened overnight. Several years ago, OpenX made the strategic decision to invest heavily in inventory quality. The investment and pay-off is evident by the continued high rankings in the Global Seller Trust Index and feedback from partners that OpenX runs the industry’s “cleanest exchange”.

Not all platforms are created equal – each has its own take on how to combat (or ignore) fraud. OpenX has a deep commitment to ensuring all elements of traffic quality are being addressed. One key aspect of our traffic quality initiative is our approach to data.

Our fully integrated system uses a combination of big data and client-side techniques to identify fraudulent and suspicious activities. We aggregate huge amounts of data and look for anomalous patterns that suggest non-human behavior. As an exchange, we have the advantage of code on the publisher page at the time the request is submitted, which means we get the earliest possible look at inventory and then decide if we want to expose buyers to that inventory. This differs from others, where verification happens after the ad is delivered.

Major publishers are increasingly being pressured by advertisers to put safeguards in place to reduce fraud and robotic traffic. Although the buy-side continues to make investments to protect themselves against ad fraud, they count on publishers to be equally aware of non-human traffic and in-view rates, two crucial pieces of information for pricing inventory appropriately

Publishers must ensure that their exchange and SSP partners share the same standards for traffic quality and are also making the necessary investments to prevent fraud. They should work with trusted third-party vendors for monitoring inventory quality and setting up real-time filters. 

For more about OpenX’s leading traffic quality initiatives, check out OpenX CEO Tim Cadogan’s discussion with The Wall Street Journal.

Programmatic Gains Momentum in U.S. Digital Advertising

by Ronald Ramlan

The Association of National Advertisers (ANA) declared ‘programmatic’ as the marketing word of the year for 2014. Surveying its members, the association discovered that marketers had woken up to the potential of programmatic.

Does it follow that 2014 was the year of programmatic? Let’s look at the trends in digital advertising, and the driving forces behind them:

Big Picture
Online ad revenue is growing at unprecedented rates. In December 2014, the IAB and PwC reported that online ad revenue reached a historic high of $12.4 billion in Q3 2014, up 17% from Q3 2013, and was on pace to top an impressive $50 billion in 2014. What’s fueling that growth?

Nearly 90% of US digital advertising spend comes in two formats: search and display. Although search continues to represent the lion’s share, the gap has been shrinking. In its report titled “US Ad Spending – Q4 2014 Complete Forecast”, eMarketer estimates that display will overtake search beginning in 2015. One reason for that shift is programmatic, which has radically transformed display advertising over the past five years, and is now a $10.9 billion industry in the US (up 45% from 2013). Continue reading

OpenX Annual Conference: The Potential of Programmatic Sophistication

OpenX recently hosted its third annual conference, bringing together senior publishing executives and ad buyers for frank and direct discussions on the state of programmatic, as well as insight on the OpenX product road map.

OpenX CEO, Tim Cadogan opened the event on the promise and potential of programmatic sophistication. Stating that only five years ago, programmatic advertising was merely a concept. Today it’s an industry worth $7 – $8 billion. While that’s an astounding (and rare) rate of growth, it’s only the first chapter for programmatic.



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Private Marketplace Best Practices: How to Set-Up Deals that Work and Scale

Miki Rapoport, Director Product, and Eric Salsa, Business Operations

As programmatic premium takes off, many advertisers see private marketplaces (PMPs) as an ideal buying model that will deliver the audiences they shutterstock_181788290need at scale adjacent to premium, relevant content. For the most part, this is a correct assumption; PMPs do offer access to high quality and brand-safe inventory that deliver great campaign results- but just like any deal, they need to be executed effectively!

Every day we work with both buyers and sellers in PMP deals, and we’ve seen first-hand that campaign success, scalability, and operational efficiency aren’t given with PMPs; they’re targets that buyers (and sellers) must work towards. How do buyers help reach these targets? Below are some best practices we’ve witnessed for creating PMP deals that work and scale. Continue reading

OpenX Gets Pixalate’s Top Mark for Inventory Quality

On December 10, 2014, Pixalate, an independent analytics firm focused on the programmatic space, recognized OpenX Exchange with the top ranking for inventory quality. This was announced as a part of its first-ever Global Seller Trust Index, ranking the 20 top-rated sellers by inventory, viewability, fraud, masking, and engagement.

We’re pleased to share OpenX ranked first in inventory quality, second overall and among the highest in each of the five categories. According to Pixalate, the index was based upon its proprietary technology that analyzes more than 100 billion monthly impressions and delivers ratings based upon inventory quality and ad performance, along with classic reach ranking. You can read more on its methodology here.

Pixalate Continue reading

What’s a Buyer ID? And Why Is It Important?

Reed Endresen, Business Development Manager

Now that programmatic advertising is going mainstream, lots of buyers are raising questions about how it works. Chief among those questions: What’s a Buyer ID? This blog post provides everything you need to know about it.

Let’s start with the basics: What’s a Buyer ID?

Buyer ID is a unique identifier that DSPs assign to their buyers (i.e. agency trading desk, agency, brand, marketer or buyer using a DSP or bidding platform) so that those buyers can be identified in programmatic trades. The Buyer ID is a numeric or alpha numeric string that is passed in the Buyer ID field in the bid response.

Why is it important?

Prior to Buyer IDs, sellers had little insight into the agencies and trading desks that purchase inventory on behalf of their brands. A Buyer ID provides OpenX with additional transparency by identifying who the buyers are. We can then use that data to establish a direct relationship with the agency or brand in order to educate them on a range of issues, including inventory quality, scale, and ways to optimize their bid strategies. We can also work with them to create strategic deals that are executed via the buyer’s DSP. Continue reading

Cross-Screen Marketing for the Holiday Season

Rachel Powney, Marketing Director EMEA

online_spending_01_07_13The second week of October 2014 saw the launch of IAB UK Digital Upfronts and the topic on everyone’s minds: cross-screen marketing. The issue is even more urgent now that Christmas is fast approaching; we all know that consumers will simultaneously use their computers, mobiles and tablets to make their purchasing decisions.

Of course, cross-screen marketing is bigger than just the holiday season. According to Internet guru Mary Meeker, mobile is the main source of growth in Internet usage. That changes a lot of things for marketers. Smart connected devices – along with advanced screen technologies – means our long-held notions of where, when and how publishers and advertisers can engage with consumers no longer applies. We’ve already witnessed an explosion in the number of smart connected devices (in the home, the car and those we can wear) arrive, and more will come as a result of the Internet of Things. Continue reading