As OpenX entered its second year, the market we were working to innovate was undergoing substantial change. In 2009, there was considerable growth in online advertising, with internet display ad spend increasing 7.3% compared to a 19.7% plunge in newspaper ad spend. The world was becoming evermore digital, and increasingly mobile, as the percentage of U.S. adults who owned a mobile phone reached 85%.
Under these market conditions, 2009 was the year the OpenX marketplace formerly launched. An article in TechCrunch called it a “win-win for the publisher,” and with these tailwinds, the company also raised a $10M Series C round of funding.
However, it had also become clear that the original founding tenet of the company – leveraging relationships from the open source ad server – was not going to work. Even with 150,000 websites that brought more than 300 billion impressions through the company’s software, the actual exchange was still in its infant stages, with low supply and even lower demand.
The team held regular meetings on a raggedy red couch to discuss which strategies to implement to improve the stagnant state of the business, and it was on that couch that a decision was made to pull up the bootstraps and begin hand-picking publishers and buyers to ensure the new exchange was built on direct partnerships with high quality publishers and buyers.
In a sense, the company was going through an identity crisis, an experience common to many startups. Was OpenX an ad-serving company or an ad exchange, and how much would the business rely on open source customers?
As this decision was being made and the new business model prioritizing high quality publishers was being rolled out, another curveball came… Google introduced their own ad exchange through the acquisition of DoubleClick.
While this posed real threats, “Real-time” bidding still didn’t exist and ad networks were still buying inventory on an analog system rather than at an impression-by-impression basis. So when one of OpenX’s early partners, Fox Audience Network, wanted to co-innovate around a new real-time bidding concept, OpenX seized the opportunity.
Three months later, OpenX launched the world’s first Real Time Bidding, or “programmatic”, ad exchange. Even without a high-profile product launch event and no guarantee that this gamble would pay off, this innovation would forever change the digital advertising industry and unleash eight straight years of strong growth for OpenX.
As OpenX entered its second year, the market we were working to innovate was undergoing substantial change. In 2009, there was considerable growth in online advertising, with internet display ad spend increasing 7.3% compared to a 19.7% plunge in newspaper ad spend.Tim Cadogan, CEO, Co-Founder
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