Peter Kafka

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Google Cuts Off AppNexus, and the Ad Tech World Shudders

AppNexus, a high-flying ad technology start-up, just had a bad few days. The next few weeks could be rough, too.

That’s because over the weekend, Google suspended the company’s access to the ad giant’s “real time” ad exchange. The move isn’t permanent, but it’s still likely to cut directly into AppNexus’s business, and it’s a very big deal for the ad tech industry.

“It’s a bombshell,” says a competitor.

AppNexus offers customers several different services, but its most important one is acting as a demand-side platform (or DSP) for clients who want to buy display advertising inventory. The bulk of that comes from Google’s DoubleClick Ad Exchange, and for now, that’s gone.

What happened? Google won’t address the incident directly, but a statement the company released today implies that it has problems with at least one AppNexus client and an ad they’ve placed:

To protect users and publishers, the Ad Exchange has extensive, widely-published policies for a range of issues including ad quality, ad content and malware. We have technologies to detect violations, and when a customer is in breach of our policies, we take action, including potential suspension from the Ad Exchange. AppNexus is a great partner, and we’re working with them through this issue to get them back on the Ad Exchange.

Via email, AppNexus President Michael Rubenstein, who left Google to join the start-up a year ago, stresses that the cutoff is “temporary,” and adds:

We’re modifying our process of working with Google to create a new arrangement whereby AppNexus clients wishing to access Google inventory will have their own individual seats on DoubleClick Ad Exchange, but will continue to serve impressions through AppNexus.

In practical terms, that means AppNexus’s ad buyers will need to set up a contract directly with Google before it lets them access its inventory again. (You can read an email Rubenstein sent to his clients on Monday, explaining the new terms, at the bottom of this post.)

That could take weeks for each ad buyer. Or they could simply take their business elsewhere and skip the process. Google itself has its own DSP, via its purchase of Invite Media earlier this year.

“I would expect a lot of these clients can’t really wait several weeks,” says Tony Katsur, general manager at MediaMath, an AppNexus competitor.

Ad industry executives tell me Google has cut off other DSPs from its ad exchange in the past. But AppNexus is a particularly high-profile player. In October, it raised $50 million in funding that included money from Microsoft, which has yet to fully embrace the “real time” display ad market itself.

Some industry insiders I’ve talked to are muttering darkly about Google sending some sort of message to Microsoft, or trying to steer business to Invite, or some other conspiratorial motives.

But none of that makes much sense to me. Google is under intense scrutiny that’s only going to get more severe. And crippling a partner–even temporarily–is the kind of thing that’s going to raise plenty of eyebrows.

Hard to imagine Google making this move lightly, and without a very good reason.
—–
Here’s the text of the email that Rubenstein sent to AppNexus clients yesterday:

From: Michael Rubenstein
Date: Mon, Nov 29, 2010 at 4:41 PM
Subject: RE: Access to Google AdX Inventory
To: Michael Rubenstein

Important Update:

Further to the notification below regarding the disruption of access to DoubleClick Ad Exchange supply, AppNexus has been in continuous contact with Google to resolve this issue. At present, Google’s position is to require all AppNexus buyers accessing Ad Exchange inventory to have a direct contract with Google in order to restore access. To be clear, this will not impact your ability to use AppNexus as your RTB platform for buying Google inventory, but simply means that you will in the future remit payment for media purchased on DoubleClick Ad Exchange to Google directly, rather than to AppNexus.

Your account manager will contact you tomorrow with details on how to proceed with restoring access to DoubleClick Ad Exchange.

We thank you for your continued patience and support as we work through this.

Regards,

Michael Rubenstein

—— Forwarded Message
From: Steven Giacomelli
Date: Sat, 27 Nov 2010 18:35:20 -0800
Subject: Access to Google AdX Inventory

Dear Client,

Beginning at 7:00 PM ET / 12:00 AM UTC, our monitoring alerted us to the fact that our real time bid requests from Google’s AdX had dropped to zero. We are investigating on our side and are also working with our contacts at Google. Currently we have no ETA for a resolution. We will update you as more details become available.

Thank you for your patience,

Steve

[Image credit: Nesher Guy]


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