Ex-Yahoo Exec Banks on Small Site Ad Platform Trend

Two months after it scored former AOL CEO Jonathan Miller as chairman, open source ad platform provider OpenX has snagged longtime Yahoo exec Tim Cadogan as CEO. In accepting the gig, Cadogan is betting there’s a future for hosted online ad management services for smaller publishers.

Cadogan, most recently SVP search, listings, and display marketplaces at Yahoo, replaces former OpenX CEO James Bilefield. Bilefield will stay with the firm through the end of the month to assist with the transition, and will act as a strategic adviser to OpenX in the future.

“I wanted to go to a smaller company dealing with questions about how to start a new business,” said Cadogan, who had been with Yahoo for about five years. In addition to its startup status, the firm’s global approach is a draw for Cadogan. “A lot of startups tend to focus on the U.S. and worry about the rest of the world later,” he said.

The company, which offers a free, customizable ad management platform, will open a new office in Pasadena, CA to supplement its London and Poznan, Poland digs. The new location will house business development and technology staff, according to Cadogan, who will run the new office in addition to heading up the entire firm.

Those yet-to-be-hired business development execs will be charged with uncovering revenue streams for the free-platform provider. The company does have some cash to play with, though. It raised $15.5 million in investor funds in January.

OpenX, formerly OpenAds, is developing a Web-based hosted version of its ad management system. The firm claims its widely-available downloadable application is used by around 30,000 publishers across the globe, while the new version is in private beta for testing by a few dozen small and mid-size sites. The downloaded and hosted platforms allow publishers to manage, optimize and target rich media and display ads sold direct or placed via ad networks and exchanges. Cadogan said the company will roll out the hosted service slowly in order to ensure quality.

Down the road, the platform could be used for inventory yield management and reporting, he added. “That’s the kind of stuff that we’re beginning to think about.”

As demand for small publisher ad management tools increases, OpenX hopes to compete with the likes of Adify, Google, and most recently, AOL’s Advertising.com. AOL yesterday introduced its new PubAccess service for small publishers in its Advertising.com display network. The system will enable site owners to block advertisers or ad categories, view activity reports and access the network’s optimization technology.

Last month Google unveiled its Web-based Ad Manager platform, intended for use by small publishers to schedule, deliver and measure ads they sell direct or through Google’s AdSense network. That system is available by invite only. Firms like Adify and Collective Media also offer solutions for smaller publishers and small, vertical publisher networks.

Though the services from AOL, Google and OpenX are all free, Cadogan stressed his firm’s competitive advantages over such offerings, including its independence from ad sellers. “An important function, for an independent entity to be the broker and management platform for the ads running on your site, is independence from the companies that are monetizing your site,” he said.

Cadogan also stressed that the customizable open source quality of the technology “is a truly neutral take on how your ads are running on your site.”

However, ad management and selling is secondary to the main focus of most small site publishers, which is content development. Many don’t have the technical expertise to adjust open source software to their individual specifications, much less the ability to pay for someone else to. Cadogan acknowledged this, noting, “We’re working on simplifying the current system so it is a little bit more acceptable to publishers.”

Until about a year ago, long-tail publishers primarily were reliant on ad networks such as Google’s AdSense and AdBrite, and affiliate marketing networks like Valueclick’s Commission Junction. Those services typically generate low revenue and offer publishers little control over the ads that show up on their sites. As independent Web publishing matures, niche sites are exploring new opportunities such as those from OpenX, hoping to attract brand advertisers and higher CPMs.

“There are a lot of smaller Web sites that don’t really know how they can participate,” said Cadogan.

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