OpenAds: A step in the right direction

I may be reading too much into this, but I take hope in a $5 million investment VCs made today in the company behind Openads, a free, open-source ad server. They already serve more than 20,000 publishers, 100,000 sites in 20-plus languages over 30-plus networks. If this becomes a platform for ad serving across the web, then I believe neat new things can happen — perhaps even the first steps toward the open-source ad network I’ve been pushing. I think this could become the basis of open competition with Google — not replacing Google but allowing publishers and advertisers to put together higher value ad hoc networks. Or maybe I’m just projecting.

I spoke last night with a founder and with one of the VCs, Index’s Saul Klein (disclosure: also an investor in Daylife, where I’m a founder). I don’t think the company man was willing to go quite as far as I was pushing — he’s quite wisely making it clear that he is working with existing networks and with Google, all of which can be served through Openads — but Saul did say that they reason they’re investing, along with Mangrove and O’Reilly Alphatech, is that they see big potential. Says their press release:

Openads allows publishers to have complete control of their advertising campaigns, offering sophisticated targeting, inventory optimization, rich media and inventory forecasting from a simple yet powerful interface.

I believe that if they create interoperable and open standards for ad measurement and serving in a broadly distributed platform and if various networks can plug in to a larger open network, then we have the beginnings of a transparent marketplace that will improve value for everyone. That’s why it’s important that Openads is free. Why not use it? And if everyone uses it, then imagine what can be built on top of that. Down the line, I see not only flexible networks but also new analytics.

So how will Openads make money if it’s free? Like other open-source companies, it will offer consulting on top of the service and software to help publishers and advertisers get more value. I see this as the WordPress model: The platform is open and that enables many companies to be built on top of it.

And if I’m not projecting too much onto Openads, then I think we see more building blocks in the new infrastructure of the web. Google is the infrastructure of search and information — and, for now, advertising. YouTube wants to be the platform for video and video ads. Facebook wants to be the social infrastructure. Openads could be the ad infrastructure. It’s all still loose — the Jell-O is yet warm — but we can start to see a structure forming.

Ladies and gentlemen, place your bets.

: A note on the current landscape: A reporter asked me what I thought about why big players are buying ad companies and I was working on this post, so I was halfway through looking at that myself. Here’s what I said:

An ever-growing proportion of advertising in all media will be sold and served via an electronic marketplaces and the question is, who will own it? Google owns the marketplace but not the serving of others’ ads; Doubleclick gives them that. Rightmedia expands Yahoo’s marketplace with other sites’ remnant inventory and Yahoo already has display sales. Microsoft needs to get into the game and aQuantive is a fit because, via Razorfish, it provides marketing enterprise services. Ad agencies are quaking as their roles — in both media and creative — can be usurped by new and both smaller and larger players, technology, and even consumers themselves, so WPP is hedging with 24/7. It is good that we have potential competition to the growing hegemony of Google.

But I told the reporter that I hope none of them owns the marketplace. That would be dangerous and expensive for both publishers and advertisers. Instead, I want to see an open-source and transparent marketplace with open and standard metrics, standard ad calls that can hook up with any network and any agency, and the easy means to set and negotiate prices (for all kinds of new values — not just pageviews), with or without auction functionality. Could Openads become that? I don’t know yet.