According to OpenX, as of December 2008 more than 300 billion ad impressions now run through its software every month. Its core product is still the open source OpenX Ad Server - version 2.6 was launched August 2008 and included a new API. This product has had more than 10,000 active downloads and is getting a 25 billion monthly ad impression run rate.

Elephant in The Room

These are impressive statistics, but there is a rather large elephant in the room which today's press release doesn't mention. That of course is Google Ad Manager, which directly competes with OpenX. In a phone call, we asked the CEO of OpenX, Tim Cadogan, if the company had any comparative data showing how OpenX was faring against its much bigger competitor. Cadogan told us that Google and other ad serving companies haven't shared their data. However he did explain how OpenX differentiated itself from Google Ad Manager. There are 3 main differences, he said:

1) OpenX is an independent, neutral provider - a point which Bernard Lunn expanded on here in a March 08 post entitled Manifesto to Avoid a Google Media Monoculture.

Tim Cadogan claimed in the call that OpenX complements what Google does - by which he meant that it can arbitrate between ad networks, including Adsense. Although Tim Cadogan didn't say it directly, the inference is that Google's Ad Manager can't do this arbitration as fairly.

In his March post Bernard made clear what the dangers of using Ad Manager are: "It is the integration [of Ad Manager] with Adsense that is a worry. [...] Take the link to Publisher tools and you get to an Adsense page with all the tools available for Publishers. Yes, all these free tools are designed to sell more AdSense. Letting Ad Manager and other Google tools automatically make these decisions on behalf of AdSense while you fly blind is not smart".

2) The second difference between OpenX and Ad Manager, according to Tim Cadogan, is that OpenX is open source and "infinitiely customizable".

Examples of companies using OpenX Ad Server are FM Publishing (another disclosure: they are our ad network), AOL's Userplane (for Enterprise), Dragon Media Online (Enterprise), and AneXusIT (Video).

3) The third difference is that OpenX is "very very feature rich" compared to other ad servers - and not just Google's, noted Cadogan.

These are all good points, although of course none of it may be relevant if Google gains dominance in the ad server market. However there's no indication that is happening and OpenX may well be carving itself a great niche as the 'Red Hat of ad servers'.

Revenue Streams

The other open question for OpenX is how will it make money? OpenX has recently developed four new revenue streams:

1) Professional services to its publishers (started in October 2008).

2) Three premium support packages, primarily targeted at large and medium publishers.

3) Premium Hosted packages for Enterprise level publishers, including additional ad impressions, support resources, service level agreements and customized solutions.

4) OpenX Market, a pilot program described as "a new monetization platform designed to connect the company's vast publisher community and their rich inventory to a wide array of advertisers".

The fourth point touches on something that we wrote about back in March. Sean Ammirati speculated that OpenX may "ultimately become an ad network" or an ad exchange. The OpenX Market seems very similar to the ad exchange idea.

So we asked Tim Cadogan if an ad network is on the cards too? Cadogan replied that OpenX won't become an ad network, but that the OpenX Market aims to help publishers source better yielding ads - so it's a 'yes' on ad exchange (but he said they're approaching it in a different way with OpenX Market), but 'no' on the ad network.

We're interested to hear from readers about whether they use OpenX or Ad Manager - or a different product - and what your experiences have been.

If you agree that a viable alternative is important to the marketplace, an interesting question is: what will OpenX's business model ultimately be? We'll focus on this question for the rest of this post.

OpenX Business Model

In our ReadWriteTalk interview, Scott mentioned two high-level revenue streams they think about regularly at OpenX:

• Providing Paid Customer Support
• Helping Publisher's Maximize their Ad Revenue

While it seems that customer support is a pretty obvious revenue stream for most open source projects, the 'maximising revenue' idea gives some interesting indications of the future business model for OpenX. Specifically, Scott highlighted three methods:

"I think that the next thing that we think about in terms of the business model is finding the best way for publishers to monetize their site ... we can help them by trying to build efficiency inside the advertising marketplace, which isn’t very efficient today. And that manifests itself in a couple of different ways.

One by getting our publishers better rates for ad networks than they could by themselves.

Another could be for our publishers to be able to take direct ads and build a workflow, so that advertising can be purchased directly from them without having to go through multiple emails and a IO process and payment process and that type of thing.

And another could be for ad networks to be able to take particular parts of inventory packaged up by publishers in a way that’s attractive for advertisers, ad networks. Those are three very specific things that we’re looking at."

Conclusion: Ultimately an Ad Exchange

This line of questioning started with me asking Scott if OpenX ultimately will become an ad exchange. While he wouldn't confirm this, when OpenX talks about "build[ing] efficiency inside the advertising marketplace" it leads me to believe that they will ultimately become an ad network. Scott did point out that they are also trying to be open and integrate with a lot of the traditional networks, such as Right Media - which is certainly a point of differentiation.

While I understand that perspective, according to Scott OpenX is "serv[ing] in the hundreds of billions of ads per month." This is in the same neighborhood as Double Click. And with the recent announcement that OpenX is launching a hosted solution (ultimately giving them even more visibility and becoming closer to publishers) an ad exchange seems inevitable at some point. In the meantime, we'll be testing the hosted ad server on ReadWriteTalk and may eventually use it on ReadWriteWeb as well.

What do you think OpenX will ultimately become? An ad exchange, or do you see another obvious business model? Also, what are your thoughts on Google launching AdManager - is it a threat to publishers?