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Advertising - Wednesday, June 13, 2007

Open Source Ad Server OpenAds Raises $5M

Index Ventures, Mangrove Capital Partners, First Round Capital O'Reilly AlphaTech Ventures and several angel investors have invested $5M in a first round into London-based OpenAds (fka phpAdsNew). The business was founded originally as a technology division within Unanimis, a digital advertising business in the UK.

OpenAds says it is used by 20K publishers in 140 countries and in 20 languages. OpenAds lists Federated Media, Stardoll, and Sun as users.

OpenAds competes with AdServers from the likes of DoubleClick (Google), and aQuantive (Microsoft). Key differences to date have been that OpenAds is free whereas the others charge, usually very low CPM rates. OpenAds has done well - and in fact serves ads on more publisher sites than anyone else - but perhaps the underlying reason that it has not been stronger is that the commercial ad servers cost so little to operate and publishers expect them to provide additional services that they wouldn't expect from an open source product. Moreover, with the multichannels of online advertising (web, email, rss, mobile, video, in-game ads, etc.) large publishers turn to large ad networks.

OpenAds will remain free but will ramp up its consulting practice. We expect they will also enter into some of the other ad channels that we mention above.

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