Jonathan Miller has had a busy couple of months. First, the former AOL chief executive was appointed to run digital operations at News Corp, effectively becoming Rupert Murdoch’s most trusted lieutenant when it comes to the internet.
While Mr Miller fine tunes News Corp’s online strategy and plots a new future for its MySpace social network – one that does not include recently departed chief executive Chris DeWolfe – he has also been busy with a couple of personal projects.
Chief among these is OpenX, an online ad server for web publishers. Mr Miller is the company’s non-executive chairman and recently contributed to a third round fund-raising which generated a total of $10m.
Dag Ventures, a Silicon Valley investment firm, led the round while other investors, including Index Ventures, the European venture capital group best known for investing in Skype, also participated.
The fund-raising will aid OpenX’s expansion and follows the launch of its new advertising exchange, which the company says will transform its revenues and help it capitalise on the thousands of companies currently using its service for free.
Until recently, OpenX generated revenues from ad hosting and by providing professional services for the web publishers that used its free, open source ad server. But although the group has become a conduit for online ad serving, with some 300bn ads flowing through its system each month, it has, until now, been unable to exploit the customers who use its products for free.
The new ad exchange should change that, says Tim Cadogan, OpenX’s chief executive. OpenX will match ad buyers with independent content publishers looking to sell inventory. OpenX will take a fee from every transaction that it facilitates – but only if the ad buyer bids above a floor price set by the publisher.
“The first step is to take and convert a lot of [our ad server customers] into the OpenX market,” he says.
A former Yahoo executive, Mr Cadogan is at pains to point out that OpenX is not an ad network. Typically ad networks will buy online ad inventory as cheaply as possible and then sell it on for as much as they can. “We’re a market maker, not a principal in the transaction,” he says.
Mr Miller, meanwhile, says the new market product could transform the fortunes of independent publishers, with about 40,000 currently using OpenX’s free software. “There’s a lot of unsold inventory out there,” he says. A market that matches buyers with sellers “makes that inventory available – and attractive.”
The problem for OpenX is that there are already a couple of giants in this space: Google’s Double Click and Yahoo’s Right Media platform. But they have tended to chase larger publishers and Mr Cadogan says there is a huge market in ad sales for smaller, independent publishers.
Online advertising growth has slowed this year as the recession has taken grip but Mr Cadogan expresses confidence that there will be an uptick in 2010.
The Los Angeles-based group has an important few months ahead of it, as does Mr Miller, who will be spending his time shuttling from News Corp’s New York headquarters to its digital HQ in Los Angeles. If OpenX takes off as he anticipates, he will have another reason to spend more time on the west coast.
