Ad tech company AppNexus has raised a $31 million funding round, which includes a $10 million investment from News Corp, involvement from Yahoo Japan, and participation from its existing investors.
While the announcement might just seem like another run-of-the-mill ad tech fundraise, the fact that two major publishers are the lead investors is likely a signal of intent towards AppNexus — and potentially away from the dominant publisher ad tech platform Google DoubleClick.
As part of its investment, News Corp — which owns a slate of huge news brands including The Wall Street Journal, Dow Jones Newswires, and The Times — has entered into a master agreement that means its properties can elect to using all of AppNexus’ products, from ad serving, to analytics.
Some News Corp brands already use AppNexus’ supply-side platform and the properties aren’t being forced into using AppNexus, but it’s likely many might make the shift (from Google or their other providers) as the result of this investment. News Corp is also an investor in another supply-side platform — Rubicon Project — so it will be interesting to see whether this new investment prompts a shift from Rubicon’s Project’s products over to AppNexus too.
In a statement, News Corp senior vice president and head of business and corporate development David Brinker said: “As individual businesses in our company started adopting AppNexus products into their technology stack, we gained further appreciation for their services. We are please to invest in AppNexus as we continue our partnership across, our news, real estate, and technology assets.”
Another part of the agreement will also see News Corp’s video ad tech division Unruly, which it acquired last year for $176 million, creating vertical video ad formats to target mobile phones.
Michael Rubenstein, AppNexus president, told Business Insider: “Currently, the Unruly inventory available on AppNexus’ platform consists primarily of outstream format. As a next step in the partnership, AppNexus and Unruly will expand the formats available to AppNexus video buyers to include vertical video. AppNexus also plans to collaborate with Unruly on the Vertical Video Collective, a network of mobile-first content creators specializing in creating video for vertical viewing.”
Rubenstein declined to confirm whether News Corp will be guaranteeing a level of spend as a result of the investment (which is how WPP’s 2014 $25 million investment in AppNexus reportedly worked).
We asked whether News Corp will benefit in any other way as a customer by making the investment — would it be spared of the so-called “ad tech tax” (the margin ad tech companies make on providing their services), for example?
Rubenstein said: “AppNexus helps companies avoid the ad tech tax, and third parties validate this. According to Cowen and Company, AppNexus charges the lowest ‘take rate’ of any company involved in the programmatic marketplace. That’s AppNexus’ value proposition: open, powerful technology with transparent, cost-effective fees.”
News Corp and Yahoo Japan now have a vested interest in AppNexus’ performance, which could make competitors uneasy about using AppNexus. Not so, according to Rubenstein.
He said: “The question should be: ‘Why wouldn’t you use AppNexus’ ad tech stack?’ We’ve built the world’s leading enterprise technology stack for publishers. Not only do we give them an end-to-end solution, but we don’t compete with them the way Google does. We’ve added a large number of top tier publishers to the platform over the past year, which is a testament to the market’s demand for an open and transparent full-stack alternative to Google’s publisher product suite.”
An AppNexus IPO next?
The financing brings AppNexus’ total investment to date up to $282 million.
AppNexus is highly-tipped to go public soon, with most people in the ad tech community predicting its IPO will land in the first quarter of 2017 — largely due to the fact that Q4 is seasonally the best-performing quarter for ad funded businesses, so it will have strong numbers to show to investors.
The Trade Desk, a California-based demand-side platform, went public on September 21. The company surpassed expectations, opening on the Nasdaq up 59% at $28.75 per share. The stock price has stayed fairly stable since.
In an interview with Business Insider on The Trade Desk’s IPO day, we asked CEO Jeff Green whether he thought AppNexus might be the next ad tech company to IPO. Green responded that he didn’t know, but that the company was committed to “empowering an ecosystem where others do well” and that AppNexus is a “great partner.”
Asked about what The Trade Desk’s IPO means for AppNexus and the ad tech market in general, Rubenstein responded: “We’ve been long-time partners with The Trade Desk and have very different business models. The programmatic market has seen a lot of growth in the past several years, and it makes sense that investors are taking interest in ad tech.”
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