OpenX becomes first major ad exchange to operate completely in the cloud

OpenX is moving its operations entirely into the Google Cloud, becoming the first major ad exchange to do so.

The recently-announced five-year, $110 million partnership between OpenX and the Google Cloud Platform, OpenX CTO Paul Ryan told me, is the first step toward the exchange’s move this year into people-based marketing.

15,000+ servers. Previously, he said, his company operated on 15,000+ servers it owned and maintained in five locations worldwide, and it only used the cloud for specific projects.

But a completely cloud-based infrastructure, he said, offers greater flexibility for innovation, a much lower latency, a more efficient platform that opens up new capabilities for bidding optimization and a faster ability to scale up or down. Plus, it frees up about 25 percent of OpenX’s engineers to work on development not related to infrastructure.

Competitively, he said, differentiators for his company’s exchange had become focused more and more on price and on a features-war that required adding new “inside baseball” capabilities — interesting to programmatic managers but not really to the brand.

Cloud “is not our key differentiator.” What is interesting to the brand, Ryan said, is people-based marketing (PBM), an approach where ad targeting is focused on identified or anonymized profiles of individuals, as defined across all channels/devices and in the real world. PBM proponents say it allows a brand to better develop a relationship with its own customers, to better identify similar people as prospective new customers, and to direct ads that are more personalized and less annoying because they are better targeted.

Brands’ number one issue, he said, is “bringing the one-to-one targeting of walled gardens to the open Web.” The three biggest walled gardens are Facebook, Amazon and, ironically, Google.

Later this year, he said, OpenX will announce new products that are oriented more toward PBM, although it will continue to service other kinds of targeting.

OpenX says its trillion transactions per day provide massive engagement data, and it has access to cross-channel consumer IDs through its relationships with demand-side platforms, data management platforms, identity resolution providers and others. At the moment, he said, OpenX doesn’t plan on adopting a single consumer ID approach.

The move to the cloud, he said, is “the first step in enabling PBM in a way no one has done before.”

“Moving into the cloud is not our key differentiator,” OpenX Chief Brand Officer Dallas Lawrence told me. “It is the enabler.”

Why you should care. Virtually every piece of software offered to marketers and advertisers is or will be cloud-based, so OpenX’s move will likely be duplicated in the near future by every other exchange.

But its new emphasis on people-based marketing could represent a milestone in the adoption of this ad targeting approach that emphasizes consistent consumer IDs across devices/channels and in physical environments.

Some ad tech providers, like ad cloud Viant/DSP Adelphic, identity resolution provider LiveRamp and ad platform Thunder, have similarly championed this approach. But the addition of OpenX provides more support for brands to move away from isolated ad targeting that delivers an ad based on, say, your cookie’s last site visit.