• by Laurie Sullivan  @lauriesullivan, March 15, 2019

OpenX announced a $110 million deal with Google in January, becoming the first major online ad exchange to fully move to the cloud.

Now the company says it plans to introduce the first identity-based targeting platform in April that will run off a cloud infrastructure. It aims to give advertisers the same experience as targeting on Facebook, but only on the open web.

Digital News Daily caught up with Dallas Lawrence, chief brand and communications officer at OpenX, to get the details. What follows is an excerpt of the conversation.

DND:  Is OpenX making big bets?

Lawrence:  We’re making a shift toward identity. This will be a game-changer for advertisers looking to move beyond Facebook and bring the experience outside the walled garden and into the open web. We have completely recognized our product team and hired a new chief product officer from Acxiom who worked closely with Facebook.

It means we’re focused on building a bigger and better Facebook advertising experience for the open web. You couldn’t do that without being in the cloud because of all the signals and data required to analyze.

The first product launch will occur in April. We have partners lined up to test it and have an announcement in June around the results. It changes our position in the market from being an SSP to an enabler of the people-based marketing platform on the open web.  

DND:  How will the move to the cloud change your business?

Lawrence:  OpenX does more than one trillion transactions daily. We are a massive data user. The scale gives us pricing control that makes the cloud less expensive. In the first half of 2018, OpenX will move into Singapore and Australia. Working in the cloud will enable us to turn on service within 24 hours and for less than on-premise servers.

DND:  How will the move to the cloud support 5G?

Lawrence:  On-premise servers are not fast enough to support 5G speeds. Last year we announced an investment to move fully into the cloud, which means moving off of servers that have become an albatross. Servers have a four- to-five-year life cycle and they are massively expensive to maintain.

For publishers it unlocks significant speed. For our own business, because we’re using Google Cloud, it puts us close to the source. When most companies built their business, cloud services weren’t an option.

If you’re a small exchange, you cannot afford to move into the cloud because it will be too expensive for on-premise servers.  

Cloud services have become a huge obstacle that could create a new barrier to entry for smaller ad-tech companies.

DND:  What’s your estimated failure rate for companies that cannot move to the cloud?

Lawrence:  I think they will cease to exist within five years. If you think about the enormous amount of data you need to process and the speed in which you need to do it, you simply cannot do it with an on-premise platform. It will affect those who cannot make the financial commitment. Half of our company employees are engineers. You can’t just write a check and throw a switch. There are enormous integrations.

There are five or six global exchanges on the SSP side that have the resources to make the pivot to the cloud, but have not done so. Every other company will have a difficult time making the change. They are too small to get the pricing power to make the cloud a viable alternative. Their overhead will be higher and they will need to charge more. It’s like comparing the Model T and the Tesla.