For $100 million to buy a competitor, AppNexus wants to do a technology ad that's different from the giants
After spending $200 million on three acquisitions last year, AppNexus on Wednesday announced the acquisition of rival Yieldex, which has ambitions to overtake Google as an independent advertising technology company.
New York-based advertising technology company AppNexus on Wednesday announced a $100 million cash-and-stock acquisition of rival Yieldex after spending $200 million on three acquisitions last year. Unlike Google's search results-based ads, and Facebook's native ads, AppNexus runs its advertising business as a procedural purchase. Its founder, Brian O'Kelley, believes: "We have a huge opportunity to redefine the way internet advertising works. The acquisition took them one step closer to their ambitions.
The evolution of AppNexus and Internet advertising
As an important way to make money on the Internet, advertising has also undergone many changes in more than a decade. In the early days, our impressions of web ads might have been hand-designed banners, search results in search engines such as Google and Baidu, or ad content mixed in the stream of information after the rise of social networks. While big companies like Facebook and Google launch new products, features, and new technologies every year for advertising, these ads are more or less costly and inaccurate.
In response to this problem, procedural buying has become a new trend, with many institutions and industry insiders predicting outbreaks of procedural purchases, such as eMarketer, a market research firm, which says the market share of procedural purchases will grow from 20% in 2011 to 201 80% of the 7-year period, and Aerly.com expects China Mobile to grow at a market size of 390 million yuan in 2014 and at a faster rate over the next three years, surpassing 3.5 billion yuan in 2017.
The biggest difference between program purchase and the advertising mentioned above is that it is the use of computer programs instead of manual media purchase, advertising procurement and other processes, through technology and data to achieve advertising. It includes live bidding mode and non-real-time bidding mode.
The earliest ad delivery technology was created by DoubleClick in the mid-1990s, and today's protagonist, AppNexus founder O'Kelly, was a CTO at DoubleClick, where O'Kelly, who entered advertising in 2003, went through the process of procedural buying from its infancy to its rise.
In September 2007, O'Kelly co-founded AppNexus with Mike Nolet, a former Right Media executive. Although Right Media started early, AppNexus became the first advertising trading platform to offer real-time bidding, and eBay became its first customer. O'Kelly has built a set of tools to make it easier to process online advertising at a fast pace and automation. Media and other networks can connect with other trading platforms and networks in a short time, quickly customize their advertising auctions, and extract 10% of the platform's advertising turnover.
Today, AppNexus' servers handle 16 billion ad purchases a day, and last year's advertising spending is expected to be as high as $700 million, making it the most extensive advertising trading platform on the open web, just behind Google. Of course, in terms of earnings, appNexus, which has net revenue of about $200 million a year, is still a long way from Google.
Last May, AppNexus completed a $60 million Round E financing, valued at $1.2 billion.
The acquisition of Yieldex will further refine its advertising services
Capital-svenged AppNexus has expanded its business, buying three companies in the past year: Allenty, a French company focused on the visual viability of advertising; MediaGlu, a four-year-old Baltimore start-up; and Open AdStream, an advertising service. Forbes Chinese.com has reported that AppNexus was able to make such a big acquisition because most of its deals were paid through its stake in the company, which is also a popular blue-chip stock because of its impending listing. The acquisition of Yieldex was also made in the form of cash and shares.
Yieldex, a New York-based startup that also serves as an advertising technology service, has two core products, one is Yieldex Analytics, which predicts and analyzes data to ensure that content publishers receive advertising revenue, and currently provides direct sales services to 50 major content publishers, including The New York Times, CBS Interactive, etc. The other is YieldexDirect, which provides integrated directory management and direct booking capabilities for direct ad buyers. The Yieldex platform can determine the maximum price per ad space in a short period of time, avoiding confusion between the ad demand side and the ad supply side.
The integration of AppNexus and Yieldex is a step-by-step process for both parties, and AppNexus CEO O'Kelly believes that Proven analysis and forecasting tools on Yieldex can help us solve many unpredictable challenges as well as help us understand our customers. For Yieldex, AppNexus, which is committed to building an open advertising technology system, is clearly a good teammate.
AppNexus survives in a stand-alone fashion at a time when the giant's share of advertising is half the global market, as its founder, O'Kelly, said in a speech in China: Differentiation is the only way to survive.
(The header is from.)Forbes.com）
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