Los Angeles Business Journal

Online Exchange to Test Mettle in Robot Battle

ADVERTISING: OpenX looks to crush cybercheats driving up Web traffic. By Subrina Hudson Monday, September 23, 2013

Internet robots are hijacking computers to create fake Web traffic. It might sound like the plot of a sci-fi movie, but for one Pasadena company, it’s a problem that costs advertisers millions.

The company, OpenX, is an ad exchange, a marketplace for advertisers and publishers to buy and sell Web ads. Last month, it rolled out a system that monitors a publisher’s traffic and quickly pinpoints and weeds out fake impressions or Web visits by “bots” run by cyberscammers.

“We think it’s the responsibility of the exchange, of whoever is representing the inventory, to provide a marketplace with high levels of integrity,” said John Murphy, vice president of marketplace quality at OpenX. “It’s not a value-added service but built into the system.”

Most advertisers pay for a Web ad based on the amount of traffic it gets. Bot software can infect a consumer’s computer, causing it to visit multiple websites at a time, inflating visits and thereby costs.

Publishers buy services to boost their traffic and they profit when the higher statistics result in more ad revenue. Some of those services use bots, according to OpenX and industry experts.

Bots have been an ongoing problem for the digital ad industry, but advertisers began to complain about them to OpenX about 18 months ago. In response, the company assembled a team of 10 to research and develop algorithms to identify bot traffic in real time.

Even though the company will lose revenue because some publishers will be blocked, it’s important to maintain the integrity of the system, executives said.

“Our fundamental belief is that this will engender a much deeper level of trust with the buy-side community and, ultimately, they will end up spending more,” said Qasim Saifee, OpenX’s senior vice president of monetization platform.

Intermediary service

OpenX, which started in 2008, has a staff of more than 300 with offices in New York, London, Tokyo and Munich. The executives won’t disclose clients, but said the firm serves the biggest ad buyers and major media publishers.

The company has grown into one of the largest ad exchanges, competing with DoubleClick, run by Google Inc.; Right Media, run by Yahoo Inc.; and Microsoft Advertising Exchange run by Microsoft Corp.

OpenX is just one of a handful of ad exchanges that operates as a standalone company.

Ad exchanges run as an intermediary between publishers and advertisers. A publisher representing thousands of individual websites will come to an exchange to sell its advertising inventory.

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