PubMatic, which launched a limited alpha to the general public today, is a new service that helps web site publishers run the highest paying ads from top ad networks. Unlike ad auctions such as Right Media, in which ad networks bid against one another to fill inventory, PubMatic takes an algorithmic approach to determining which ads will pay publisher's the most.

For now, PubMatic works with Google Adsense, Yahoo! Publisher Network, ValueClick, and Komli. The New York-based company will be adding more networks following their alpha launch, and is looking into adding generic support that would allow publishers to fill their inventory from ad networks that are not officially supported. The public alpha test is free to anyone, but will be limited to the first 100 publishers to sign up today on a first come, first served basis.

When you first log in to PubMatic you're greeted by a simple dashboard that displays your most recent earnings statistics. The information is broken down by ad network, and includes the number of impressions, clicks, revenue, and eCPM from each network, for each day. Users can get more detailed reports, broken down by website or ad network, or by ad size or type on a special reports page. For now, PubMatic only includes a handful of pre-defined reports, but the developers hope to add custom reporting to the application soon.

"Publishers today are being overwhelmed with choice and complexity when it comes to selling their ad inventory. What used to be a relatively straightforward process now requires publishers to make dozens of decisions about ad networks, ad formats, campaign types and more that can significantly impact the revenue that a publisher earns. PubMatic’s platform works on behalf of web publishers by using sophisticated algorithms that learn about a publisher’s web site and then makes thousands of decisions in real time to maximize the revenue that publishers earn while at the same time eliminating much of the complexity." -- Rajeev Goel, General Manager, PubMatic

The first step in setting up PubMatic is to enter login credentials for each network you want to use. Next, publishers set up what are called "ad tags," which are the individual ad codes for each advertisment placed on your page. You choose which of the four networks you want competing for that space, the size and placement of the ad, the colors, and on which of your web sites the ad will appear. PubMatic can optionally choose and optimize the colors for you for text ads.

Once your ad tags are set up and implemented, PubMatic will hold an auction behind the scenes for each page view to determine which ad network and type (CPM, CPC, etc.) will pay the publisher the most money and serves that ad. PubMatic has developed a predictive algorithm that attempts to figure out which ad network will pay publishers the most for each impression. The service then creates real-time reports aggregated across all networks that the user is participating in and updates them in one place (the user's PubMatic account page). "We think we can achieve revenue lift for publishers while at the same time reducing time spent on the 'business' of web publishing," said PubMatic General Manager, Rajeev Goel.

PubMatic can also optimize ad layout. During the alpha, the application only optimizes colors for text ads, but in the future there are plans for the software to also optimize for ad size and placement as well. Further, the app gathers historical data to better target ads to specific users.

PubMatic is also launching a widget for publishers using the Yahoo! Widget Engine. The widget offers real-time, aggregate stats across multiple networks, and is open to anyone -- even those who are not members of PubMatic (so anyone left out of the alpha test can still use the widget by entering login credentials for ad networks via the widget itself).

For now PubMatic is free, and may remain that way. Goel told me that the company has not yet decided on a business model and is concentrating on building out the service. In the future, PubMatic is considering charging publishers for value added services, or working directly with ad networks to sell inventory.