Orange and OpenX Partner on European Ad Exchange

European spending on ad exchanges lags behind the U.S., where the early exchanges – including Right Media, AdECN, and DoubleClick AdEx – were launched. But the continent is expected to close the gap in coming years. According to JP Morgan and Think Equity, ad exchange spending in Europe will rise from approximately $200 million in 2010 to $800 million in 2012.

To capture that expected growth, telco giant Orange has partnered with display ad management start-up OpenX to offer a multi-lingual, multi-currency ad exchange option for European ad buyers.

The creation of the exchange, dubbed Orange Ad Market, is remarkable not for the underlying technology – which already existed – but for its potential to preach the gospel of audience-based ad buying in Barcelona, Paris, and other regions where media buys still go mainly through publishers and ad networks.

It has that potential because, in addition to being a carrier and ISP of significant size, Orange operates a pan-European display ad network – acquired last year – that reaches approximately 343 million European Internet users monthly (comScore 2008 data) and an undisclosed number of publishers and ad buyers. Orange intends to leverage its relationships with those media buyers and publishers to sell its new ad exchange offering.

It will take some work, acknowledges Vincent Pelillo, director of Orange Group Advertising Network.

“First, we need to convince ad agencies it’s a space for them,” Pelillo told ClickZ. “Media buying is really time consuming compared to the level of margin they could generate [through this exchange].”

He continued, “Second is to make sure the market is open to everybody on the supply side. We need to make sure we can fill the majority of demand we create.”

Under the companies’ multi-year arrangement, Orange Ad Market will launch in the U.K. and France in the next three months, to be followed later by other countries within Orange’s European footprint. Initial plans are to support three languages – Spanish, English, and French – and three currencies – British pound sterling, euros, and dollars. The euro is the standard currency in France, Spain, and more than a dozen other European Union states.

Pasadena-based OpenX already offers its own ad exchange platform, OpenX Market, which uses the same underlying technology that the Orange Ad Market will operate on. That platform has been open to publishers worldwide since it launched a year ago, and reaches approximately 250 million users per month globally, according to the company’s own statistics.

By offering tools for European buyers, publishers, and ad networks in different countries, Tim Cadogan, CEO of OpenX, says the company is creating the first scaled display ad marketplace positioned to do well in markets outside the U.S.

“What we’re doing is adding a layer of regional focus, tools and people to feed in more demand from European people,” he said. “The value is in being able to have a U.S. buyer, a U.K. buyer, a French buyer, and a Japanese ad buyer, all competing for the same impression.”

OpenX supports real-time bidding, an increasingly important capability for marketers that are assembling media buys using in-house and third party data sources. Such ad buyers may work with a company such as BlueKai to identify in-market auto shoppers for instance, then scoop up some of those individuals when they are identified on ad exchanges.

Its real-time bidding support includes both server-side and client-side bidding. OpenX also supports custom retargeting and contextual ad categories.

The companies acknowledge it may be a while before buyers in different European countries begin bidding competitively on inventory available through the Orange Ad Market and the OpenX Market.

“We know it’s not going to come in one day,” said Orange’s Pelillo.

Orange is a unit of Paris-based France Telecom.

Follow Zachary Rodgers on Twitter at @zachrodgers.

Jack Marshall contributed.

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