As has been reported in TechCrunch and on other places this morning, Open Ads has received a $5 million VC investment led by Index Ventures. The other firms participating included First Round Capital, Mangrove Capital Partners, and OÄôReilly AlphaTech Ventures.
I included Open Ads as potentially part of the solution I proposed last month in my post Google’s Vulnerability – An Open Ad Network. Interestingly, Josh Kopelman, of First Round Capital, explains his firms’ investment in Open Ads as:
What really excites me about OpenAds is that they are in a wonderful position to shrink the adserving market. By removing the adserving costs, publishers can now focus on raising their effective CPM. This is especially important for small and mid-sized publishers, who previously had a limited choice of adserving technologies — and no real ability to impact pricing.
I agree that shrinking the ad serving market is important. However, even more important than the serving costs would be eliminating the taxes that publishers pay to the networks in their revenue share. Jeff Jarvis has a similar theory in his coverage of the investment today, although seems to be more focused on publishers creating multiple networks.
I think this could become the basis of open competition with Google — not replacing Google but allowing publishers and advertisers to put together higher value ad hoc networks. Or maybe IÄôm just projecting.
If it played out like Jeff projects, I think the a company with an open source business model (such as OpenAds) would need to manage the set of ad networks at a minimum. At that point, this ultimately might end up working morel like an Ad Exchange. (See a great overview of Ad Exchanges in the Wall Street Journal.) However, one single open network still seems more likely to me.
Anyway, the space continues to get more and more interesting. From the comments of my last post, it’s obviously piqued the interest of a few entrepreneurs. So ultimately, we’ll have to wait and see how it plays out, but I’m still hoping for an outright open ad network.
What are your interpretations of the impact of the new investment in Open Ads?
