OpenX, an independent ad exchange and supply-side platform that helps publishers sell advertising programmatically, says it plans to increase investment in its ad quality initiatives to around $25 million this year.
The ad-tech firm says the money will be spent, in part, on its quality team, which consists of around 30 people. The funds will also be used to help the company continue to work with third-party verification firms and for it to pay to get its services accredited by official industry bodies.
The company believes its investment in ad quality is one of the reasons its revenue was up 20% in its fourth quarter, at a time when some rival ad-tech firms had a challenging year. The ad-tech sector has faced headwinds brought by heightened scrutiny from marketers over their online ad spending, new technologies such as header bidding and Google and Facebook’s continued dominance of the online ad market.
“We’re really trying to take a long view and build a sustainable business but also shape the category,” Mr. Cadogan said.
OpenX spent $16 million on quality investments in 2017, such as paying to get accredited by the Interactive Advertising Bureau’s Trustworthy Accountability Group, according to Chief Executive Tim Cadogan. He says the closely held company posted net revenue of more than $170 million last year, mid-single-digit growth from the prior year.
The company wouldn’t disclose its precise 2016 revenue figure. In 2015, OpenX said it booked $140 million in net revenue, which was up 40% on the prior year.
OpenX, which employs about 500 people, says 2017 was its fourth-straight year of profitability.
The ad-tech industry has suffered from a number of transparency and quality-related issues including ad fraud, brand safety, ads monetizing fake news sites, and problems caused by confusing contracts and fees.
Transparency in ad-tech came into particular focus at the start of 2017, when Procter & Gamble Chief Brand Officer Marc Pritchard delivered two landmark speeches at industry conferences, calling on the digital ad industry to clean up its act. Other marketers, including Unilever’s Keith Weed and JPMorgan Chase’s Kristin Lemkau, have also used their stature to call for digital platforms to provide better measurement and assurances their ads will appear in safe environments.
As brands look deeper into the efficiency of their digital ad buys, the ad industry has created new initiatives and standards to provide quality assurances to marketers.
One such initiative is Ads.txt, where publishers can list on their websites all the legitimate sellers of their ad inventory to help prevent an ad fraud practice called “domain spoofing.”
The European Union’s General Data Protection Regulation, which comes into force in May this year, will also require ad-tech vendors to apply stricter process to the way they handle and get permission to use data on European citizens for advertising purposes.
“What’s really changed in just a year is you’ve gone from all these companies making claims about [transparency] to there being clear and verifiable standards that are unambiguous,” Mr. Cadogan said.
OpenX isn’t alone in the industry in making a transparency announcement in recent months. Sam Thompson, a senior managing director in the media, marketing and enterprise technology division at advisory firm Progress Partners, said going beyond “lip service” to ad quality requires considerable financial and time investments.
“It’s more than just the budget; it’s about how the company is changing their purpose and values as an operating company so everyone inside is operating toward the same goal,” Mr. Thompson said.
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